AskMyFinance

Author: AskMyFinance Editorial Team

  • Home Affordability Calculator: How Much House Can You Afford?

    Disclosure: This page contains affiliate links. We may earn a commission if you apply for or purchase a product through our links. This does not affect our reviews or ratings, which are based on independent research.

    Buying a home is the biggest financial decision most people ever make. Before you fall in love with a house, you need to know what you can actually afford. This guide walks you through how to calculate your home-buying budget and what lenders look at when you apply for a mortgage.

    The 28/36 Rule: The Basic Starting Point

    Financial experts use the 28/36 rule as a starting point for home affordability. Here is what it means:

    • 28% rule: Your monthly mortgage payment (including taxes and insurance) should be no more than 28% of your gross monthly income.
    • 36% rule: Your total monthly debt payments (mortgage plus car loans, student loans, credit cards, etc.) should be no more than 36% of your gross monthly income.

    Here is how to calculate your number:

    1. Take your annual salary and divide by 12 to get your gross monthly income.
    2. Multiply that by 0.28 to get your max mortgage payment.
    3. Multiply by 0.36 to get your max total debt payment.

    Example Calculation

    Annual income: $80,000

    • Gross monthly income: $80,000 ÷ 12 = $6,667
    • Max mortgage payment (28%): $6,667 × 0.28 = $1,867
    • Max total debt (36%): $6,667 × 0.36 = $2,400

    If you already pay $400 per month on a car loan and $200 in student loans, your remaining budget for a mortgage is about $1,800 — right at the 28% limit.

    What Home Price Does That Support?

    Your mortgage payment depends on the home price, your down payment, and the interest rate. Here is a rough guide based on a 7% mortgage rate and 20% down payment:

    Gross Annual Income Max Monthly Payment (28%) Estimated Home Price
    $50,000 $1,167 ~$170,000
    $75,000 $1,750 ~$255,000
    $100,000 $2,333 ~$340,000
    $150,000 $3,500 ~$510,000
    $200,000 $4,667 ~$680,000

    Rates as of May 2026. Rates change often. Check with each lender for current rates before you apply.

    These are estimates. Your actual number depends on your debt, down payment, credit score, and current rates.

    What Lenders Actually Look At

    Banks and mortgage companies do not use the 28/36 rule exactly. They use their own calculations. Here is what lenders examine when you apply:

    Debt-to-Income Ratio (DTI)

    Your DTI compares your total monthly debts to your gross monthly income. Most lenders want your DTI below 43%. Some will go up to 50% with strong credit or a large down payment.

    Credit Score

    Your credit score affects both your approval odds and your interest rate. A higher score gets you a better rate, which lowers your monthly payment. For tips on getting the best mortgage rates, see our guide to first-time homebuyer loan programs.

    Down Payment

    The more you put down, the smaller your loan and the lower your payment. Putting down at least 20% also removes the need for private mortgage insurance (PMI), which can add $100 to $300 per month to your payment.

    Employment History

    Lenders want to see stable income. They usually want at least 2 years of employment history in the same field. Self-employed borrowers need to show 2 years of tax returns.

    Hidden Costs of Homeownership

    The mortgage payment is not your only cost. Many first-time buyers underestimate what they pay each month. Add these into your budget:

    • Property taxes: Typically 1% to 2% of the home’s value per year
    • Homeowners insurance: Typically $1,000 to $2,000 per year
    • PMI (if down payment is under 20%): 0.5% to 1.5% of the loan per year
    • HOA fees (if applicable): $100 to $500+ per month
    • Maintenance: Budget 1% to 2% of the home’s value per year for repairs

    Total Monthly Cost Example

    Home price: $300,000, 10% down ($30,000), 7% rate, 30-year term

    • Principal + interest: $1,795
    • Property taxes (1.2%/year): $300
    • Homeowners insurance: $125
    • PMI (0.8%/year): $200
    • Total monthly payment: ~$2,420

    Getting Pre-Approved

    Once you know your budget, get pre-approved before you shop for homes. Pre-approval is a lender’s written commitment to lend you a specific amount. It shows sellers you are serious and helps you move fast when you find the right home.

    For a step-by-step guide, see our article on how to get pre-approved for a mortgage.

    FHA vs. Conventional Loans: Which Fits Your Budget?

    FHA loans have lower down payment requirements (3.5%) and accept lower credit scores (500 with 10% down, 580 with 3.5% down). But they require mortgage insurance for the life of the loan in most cases.

    Conventional loans require better credit (620 minimum) and a higher down payment, but PMI goes away once you reach 20% equity.

    See our full breakdown of FHA loan requirements to compare.

    Frequently Asked Questions

    What is the 28/36 rule for buying a home?
    The 28/36 rule says your mortgage payment should be no more than 28% of your gross monthly income. Your total debt payments (mortgage plus all other debts) should be no more than 36% of your gross monthly income.
    How much house can I afford on a $75,000 salary?
    On a $75,000 salary, your gross monthly income is $6,250. The 28% rule gives you a max mortgage payment of about $1,750 per month. That typically means you can afford a home priced around $270,000 to $320,000, depending on your down payment and interest rate.
    What credit score do I need to buy a house?
    You typically need at least a 620 credit score for a conventional loan. FHA loans allow scores as low as 500 with a larger down payment. The higher your score, the better your mortgage rate.
    Does my debt affect how much house I can afford?
    Yes. Lenders look at your debt-to-income ratio (DTI). The more debt you carry, the lower your home-buying budget. Paying off debts before buying can increase your purchasing power.
    What is a good down payment for a first home?
    A 20% down payment is traditional and avoids private mortgage insurance (PMI). But many first-time buyers put down 3% to 10%. FHA loans require just 3.5% down.

    Bottom Line

    Use the 28/36 rule to estimate your home budget, but remember that lenders look at your full financial picture. Keep your DTI below 43%, save for a solid down payment, and get pre-approved before you start house hunting. Knowing your real number before you shop saves you from falling in love with a home you cannot afford.

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  • Mortgage Payment Calculator: What Will My Monthly Payment Be?

    Disclosure: This page contains affiliate links. We may earn a commission if you apply for or purchase a product through our links. This does not affect our reviews or ratings, which are based on independent research.

    Your monthly mortgage payment is the biggest number in your home-buying budget. Understanding what goes into it helps you plan, compare loan options, and avoid surprises. This guide explains how mortgage payments work and what factors change them.

    What Goes Into a Mortgage Payment?

    Most people think a mortgage payment is just principal and interest. But most lenders also collect property taxes and insurance in your monthly payment. The full breakdown is called PITI:

    • P — Principal: The portion of your payment that pays down your loan balance
    • I — Interest: The cost of borrowing the money
    • T — Taxes: Property taxes, collected monthly and held in escrow until due
    • I — Insurance: Homeowners insurance, also held in escrow

    If you put down less than 20%, you also pay PMI (private mortgage insurance), which is added to your monthly bill.

    Sample Monthly Payment Breakdown

    Home price: $350,000, 10% down ($35,000), 7% rate, 30-year term

    Component Monthly Cost
    Principal + Interest $2,095
    Property Taxes (1.2%/yr) $350
    Homeowners Insurance $125
    PMI (0.8%/yr on loan) $221
    Total Payment $2,791

    Rates as of May 2026. Rates change often. Check with each lender for current rates before you apply.

    How Interest Rate Changes Your Payment

    Interest rate is the biggest factor in your principal and interest payment. Even small rate changes make a big difference over a 30-year loan.

    Interest Rate Monthly P+I on $300,000 Total Interest Paid
    5.5% $1,703 $313,212
    6.5% $1,896 $382,633
    7.0% $1,996 $418,527
    7.5% $2,098 $455,089
    8.0% $2,201 $492,311

    A 1% rate difference on a $300,000 loan costs you more than $65,000 over 30 years. That is why comparing mortgage rates matters so much.

    For today’s rate comparisons, see our guide to the best mortgage refinance rates.

    15-Year vs. 30-Year Mortgage: Which Is Better?

    You can repay a mortgage over 15 or 30 years (and other terms). Here is how they compare on a $300,000 loan at 7%:

    Feature 30-Year 15-Year
    Monthly P+I payment $1,996 $2,696
    Total interest paid $418,527 $185,367
    Total amount paid $718,527 $485,367

    The 30-year mortgage has a much lower monthly payment, but you pay over $230,000 more in interest over the life of the loan. The 15-year option builds equity faster and saves a lot of money, but requires a higher monthly payment.

    What Is Amortization?

    Amortization is how your loan balance goes down over time with regular payments. In the beginning, most of your payment goes to interest. Over time, more goes to principal.

    Here is what a $300,000 loan at 7% looks like in the first few years:

    Year Principal Paid Interest Paid Remaining Balance
    1 $3,765 $20,985 $296,235
    5 $5,303 $19,447 $279,420
    10 $7,471 $17,279 $256,290
    20 $14,818 $9,932 $194,020
    29 $27,932 $2,818 $26,893

    This is why paying extra each month early in your loan can save a large amount of interest — you reduce the principal balance faster, which reduces the amount that accumulates interest.

    PMI: What It Is and When It Goes Away

    Private mortgage insurance (PMI) is required when you put down less than 20% on a conventional loan. It protects the lender, not you.

    PMI typically costs 0.5% to 1.5% of your loan per year. On a $300,000 loan, that is $1,500 to $4,500 per year ($125 to $375 per month).

    PMI goes away automatically once you reach 20% equity in your home (based on the original home value). You can also request its removal once you hit 20% equity through payments or appreciation.

    How to Get a Lower Monthly Payment

    • Put more money down. A 20% down payment eliminates PMI and reduces your loan amount.
    • Improve your credit score. Better credit gets you a lower rate, which lowers your payment.
    • Shop for the best rate. Getting quotes from 3 or more lenders can save you tens of thousands of dollars.
    • Choose a longer term. A 30-year loan has a lower payment than a 15-year, though you pay more total interest.
    • Refinance if rates drop. If you buy when rates are high and they drop later, refinancing can lower your payment significantly.

    If you are a first-time buyer, explore low down payment programs in our guide to first-time homebuyer loan programs.

    For FHA loan details, see our article on FHA loan requirements.

    Frequently Asked Questions

    What is included in a mortgage payment?
    A full mortgage payment typically includes principal, interest, property taxes, homeowners insurance, and PMI if your down payment is less than 20%. This is often called PITI: principal, interest, taxes, and insurance.
    How is a mortgage payment calculated?
    Your payment is calculated using the loan amount, interest rate, and loan term. The lender uses a formula to divide your total loan cost (including interest) into equal monthly payments over the loan term.
    What is amortization?
    Amortization is the process of paying off a loan with regular payments over time. In the early years of your mortgage, most of each payment goes to interest. Over time, more of each payment goes to principal.
    How can I lower my monthly mortgage payment?
    You can lower your payment by making a larger down payment, getting a lower interest rate, choosing a longer loan term (30 vs. 15 years), or refinancing if rates drop.
    What is PMI and how much does it cost?
    PMI stands for private mortgage insurance. It is required when you put down less than 20%. It typically costs 0.5% to 1.5% of your loan amount per year, added to your monthly payment.

    Bottom Line

    Your mortgage payment is made up of principal, interest, taxes, insurance, and possibly PMI. Interest rate has the biggest impact on your payment — even a 0.5% difference saves or costs tens of thousands of dollars over 30 years. Shop around, improve your credit before you apply, and understand all the costs before you commit.

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  • VA Loan Requirements 2026: Who Qualifies and How to Apply

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    What Is a VA Loan?

    A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs. It is offered to eligible veterans, active-duty service members, and surviving spouses. VA loans have some of the best terms available anywhere in the mortgage market: no down payment, no private mortgage insurance, and competitive interest rates.

    Private lenders like banks and mortgage companies make VA loans, but the VA guarantees a portion of each loan. This reduces risk for lenders and lets them offer better terms to borrowers.

    VA Loan Eligibility Requirements

    Service Requirements

    You must have served in one of these categories to be eligible:

    Active-duty service members: Currently serving and have been on active duty for at least 90 consecutive days.

    Veterans: Served the required time and were discharged under conditions other than dishonorable.

    Wartime Service Peacetime Service National Guard / Reserve
    90 consecutive days active duty 181 consecutive days active duty 6 years of service OR 90 days active during wartime

    National Guard and Reserve members: 6 years of service, or 90 days of active duty during wartime, or 181 days in peacetime.

    Surviving spouses: Unmarried spouses of veterans who died in service or from a service-connected disability. Spouses of POWs or MIAs may also qualify.

    Certificate of Eligibility (COE)

    To apply for a VA loan, you need a Certificate of Eligibility from the VA. This document proves to lenders that you meet service requirements. You can get your COE online through the VA’s eBenefits portal, through your lender, or by mail using VA Form 26-1880.

    Credit Score Requirements

    The VA does not set a minimum credit score. Individual lenders set their own minimums. Most require at least 580 to 620. Borrowers with scores above 680 will have the most lender options and the best rates.

    Income and DTI Requirements

    VA lenders look at your debt-to-income ratio. Most prefer DTI under 41%. But the VA also uses a residual income test, which checks how much money you have left over after paying all debts and living expenses. This is unique to the VA program and often helps borrowers who have higher DTIs.

    VA Loan Benefits

    Zero Down Payment

    This is the biggest benefit. With a conventional loan, you typically need 3% to 20% down. On a $300,000 home, 20% down is $60,000. VA loans require $0 down for qualified borrowers with full entitlement.

    No Private Mortgage Insurance (PMI)

    Conventional loans require PMI when you put down less than 20%. PMI typically costs 0.5% to 1.5% of the loan per year. On a $300,000 loan, that is $1,500 to $4,500 per year. VA loans have no PMI at all.

    Competitive Interest Rates

    Because the VA backs a portion of the loan, lenders take on less risk. This lets them offer lower interest rates than many other loan types, often 0.25% to 0.50% lower than conventional loans.

    Limits on Closing Costs

    The VA limits the fees lenders can charge. Sellers are also allowed to pay all of your closing costs under VA rules, which can further reduce your out-of-pocket expenses at closing.

    Foreclosure Avoidance Assistance

    If you ever struggle to make payments, the VA has dedicated staff to help you work with your lender to avoid foreclosure.

    The VA Funding Fee

    The VA funding fee is a one-time charge that helps fund the VA loan program. It is not paid out of pocket by most borrowers; it is usually rolled into the loan amount.

    Down Payment First VA Loan Subsequent VA Loan
    Less than 5% 2.15% 3.30%
    5% to 9.99% 1.50% 1.50%
    10% or more 1.25% 1.25%

    Who is exempt from the funding fee:

    • Veterans receiving VA disability compensation
    • Surviving spouses of veterans who died in service or from a service-connected disability
    • Service members who have received the Purple Heart

    VA Loan Limits

    As of 2020, there are no VA loan limits for borrowers with full entitlement. You can borrow as much as a lender is willing to lend you with no down payment.

    If you have used your VA loan entitlement before and still have an active VA loan, limits still apply based on your remaining entitlement and your county’s conforming loan limit.

    How to Apply for a VA Loan

    Step 1: Get your Certificate of Eligibility from the VA.

    Step 2: Find a VA-approved lender. Most banks and mortgage companies are approved. Compare at least 2 to 3 lenders for the best rate.

    Step 3: Get preapproved. The lender will verify your COE, pull your credit, and review your income.

    Step 4: Find a home. VA loans can only be used for primary residences, not investment properties or vacation homes.

    Step 5: VA appraisal. The VA requires its own appraisal to confirm the home meets minimum property requirements. This protects you and the VA.

    Step 6: Close the loan. Review all documents and sign.

    For a full comparison of loan programs available to homebuyers, see our guide to the best first-time homebuyer loan programs of 2026. You may also want to read our guide to FHA loan requirements to compare your options.

    VA Loan vs. FHA Loan vs. Conventional Loan

    Feature VA Loan FHA Loan Conventional
    Down payment 0% 3.5% 3% to 20%
    PMI required No Yes (MIP) Yes if under 20% down
    Min credit score 580 (lender-set) 580 620
    Funding/insurance fee 1.25% to 3.3% 1.75% upfront + annual None
    Who can use it Veterans, military Anyone who qualifies Anyone who qualifies

    Frequently Asked Questions

    Who qualifies for a VA loan?

    Active-duty service members, veterans, National Guard members, reservists, and surviving spouses of veterans who died in service or from a service-connected disability may qualify for a VA loan.

    What credit score do you need for a VA loan?

    The VA does not set a minimum credit score. Most VA lenders require at least 580 to 620. Some lenders will go as low as 500 with strong compensating factors.

    Do VA loans require a down payment?

    No. VA loans allow 0% down payment for eligible borrowers. This is one of the biggest benefits of the VA loan program.

    What is the VA funding fee?

    The VA funding fee is a one-time charge that helps fund the VA loan program. It ranges from 1.25% to 3.3% of the loan amount depending on down payment size and whether it is your first VA loan. Some veterans are exempt.

    Can I use a VA loan more than once?

    Yes. VA loan eligibility can be restored after you sell your home and pay off the previous VA loan, or you can have two VA loans at once if your entitlement allows it.

    Rates as of May 2026.

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  • USDA Loan Requirements 2026: Zero Down for Rural Buyers

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    What Is a USDA Loan?

    A USDA loan is a government-backed mortgage from the U.S. Department of Agriculture. It was created to help moderate and low-income borrowers buy homes in rural and certain suburban areas. The biggest benefit is zero down payment. You can buy a home with no money down as long as you meet the income and location requirements.

    USDA loans are not just for farmers. Many suburban neighborhoods and small towns qualify. If you are buying outside a major city, there is a good chance a USDA loan could work for you.

    USDA Loan Types

    There are two main types of USDA home loans:

    USDA Guaranteed Loan (Section 502 Guaranteed): The most common type. Made by private lenders and backed by the USDA. For moderate-income households. This is what most buyers use.

    USDA Direct Loan (Section 502 Direct): Funded directly by the USDA for very low and low-income households. These come with payment assistance to lower the monthly cost. You apply directly through the USDA, not a private lender.

    This guide focuses on the Guaranteed Loan, which is the more common program.

    USDA Loan Requirements

    Location Eligibility

    The property must be in an eligible rural or suburban area. This does not mean farmland only. Many small towns, rural communities, and suburban areas just outside major cities qualify.

    To check if a specific address qualifies, use the USDA’s eligibility map at eligibility.sc.egov.usda.gov. You can enter any address to see if it falls within an eligible area.

    Income Limits

    USDA loans are for households that meet moderate income guidelines. The limit is 115% of the area median income (AMI) for your county.

    Household Size Typical Income Limit (Many Areas)
    1 to 4 people $103,500 to $115,000
    5 to 8 people $136,600 to $152,000

    These numbers vary by county. High-cost areas may have higher limits. Check the USDA eligibility site for the exact limit in your area.

    Important: USDA counts the income of all household members over 18, not just the borrowers on the loan. If an adult child lives with you but is not on the loan, their income still counts toward the household total.

    Credit Score

    The USDA does not set a formal minimum credit score. Most lenders require at least 640 for streamlined processing. If your score is below 640, you may still qualify through manual underwriting, but the process takes longer and requires more documentation.

    Debt-to-Income Ratio

    USDA has two DTI guidelines:

    • Front-end DTI: Housing payment should be no more than 29% of gross monthly income
    • Back-end DTI: Total monthly debts should be no more than 41% of gross monthly income

    Lenders can approve higher DTIs if you have strong compensating factors like a high credit score, significant savings, or low housing payment history.

    Property Requirements

    The home must be your primary residence. USDA loans cannot be used for investment properties or second homes.

    The property must meet USDA minimum property standards, which include:

    • Functioning heating, plumbing, and electrical systems
    • Structurally sound foundation and roof
    • No major safety hazards
    • A modest size for the area (no luxury features)

    USDA Loan Fees

    USDA loans have two fees that function like mortgage insurance:

    Upfront guarantee fee: 1% of the loan amount. Paid at closing or rolled into the loan.

    Annual fee: 0.35% of the remaining loan balance, paid monthly as part of your mortgage payment.

    Loan Amount Upfront Fee (1%) Annual Fee (0.35%)
    $200,000 $2,000 $700/year ($58/month)
    $300,000 $3,000 $1,050/year ($88/month)
    $400,000 $4,000 $1,400/year ($117/month)

    Compared to FHA loans (1.75% upfront + 0.55% to 1.05% annually), USDA fees are significantly cheaper.

    USDA vs. FHA Loan: Which Is Better?

    Feature USDA Loan FHA Loan
    Down payment 0% 3.5%
    Min. credit score 640 (lender-set) 580
    Upfront fee 1% 1.75%
    Annual fee 0.35% 0.55% to 1.05%
    Location restriction Rural/suburban only No restriction
    Income limit Yes (115% of AMI) No

    If you qualify for both, USDA is usually the better deal. Zero down and lower fees mean a lower monthly payment and less money out of pocket. For a full look at FHA requirements, see our guide to FHA Loan Requirements 2026.

    USDA vs. Conventional Loan

    Conventional loans require at least 3% down and private mortgage insurance if you put down less than 20%. USDA loans require zero down and have cheaper annual fees than most PMI.

    Conventional loans have no location or income restrictions. If you earn too much or want to buy in a city, a conventional loan is your path. If you qualify for USDA, the savings on down payment and fees can be substantial.

    How to Apply for a USDA Loan

    Step 1: Check the USDA eligibility map to confirm your target home qualifies.

    Step 2: Calculate your household income and check it against the income limit for your county.

    Step 3: Get prequalified with a USDA-approved lender. Most banks and mortgage lenders are USDA-approved.

    Step 4: Find a home in an eligible area and make an offer.

    Step 5: The lender processes your loan and submits it to the USDA for final approval.

    Step 6: Close on the home.

    The USDA underwriting step adds time compared to conventional loans. Budget 30 to 60 days for closing rather than the typical 30 days.

    For a broader look at homebuyer loan programs, see our guide to the best first-time homebuyer loan programs of 2026. If you are thinking about how much to put down, our guide on how much down payment you need to buy a house breaks down all your options.

    Frequently Asked Questions

    What are the income limits for a USDA loan?

    USDA income limits depend on your location and household size. In most areas, the limit is 115% of the area median income. For a family of four in many parts of the country, this is roughly $100,000 to $115,000 per year. Check the USDA eligibility site for your specific county.

    What areas qualify for a USDA loan?

    USDA loans are available in rural and some suburban areas. You do not need to buy a farm. Many small towns and areas on the outskirts of major cities qualify. Use the USDA eligibility map to check a specific address.

    What credit score do you need for a USDA loan?

    The USDA does not set a minimum credit score, but most lenders require at least 640 for streamlined processing. Scores below 640 may still qualify with manual underwriting.

    Do USDA loans require mortgage insurance?

    Yes, but it is cheaper than FHA mortgage insurance. USDA loans charge a 1% upfront guarantee fee and a 0.35% annual fee. Compare that to FHA, which charges 1.75% upfront and 0.55% to 1.05% annually.

    Can I use a USDA loan to buy a fixer-upper?

    Yes, with a USDA Section 504 loan for repairs. However, the standard USDA purchase loan requires the home to be in good condition and meet minimum property standards.

    Rates as of May 2026.

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  • How to Get Pre-Approved for a Mortgage in 2026

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    Why Pre-Approval Matters

    Getting pre-approved for a mortgage is one of the first steps in buying a home. A pre-approval letter tells sellers you are a serious buyer. It shows that a lender has reviewed your finances and is willing to lend you up to a certain amount.

    In a competitive market, sellers often will not consider offers without a pre-approval letter. Getting pre-approved before you start shopping also tells you exactly how much home you can afford, so you do not waste time looking at homes outside your budget.

    Pre-Qualification vs. Pre-Approval: Know the Difference

    These two terms are often confused. They are not the same thing.

    Feature Pre-Qualification Pre-Approval
    Credit check Soft pull or none Hard pull
    Documents verified No Yes
    How strong it is Weak estimate Strong commitment
    Time to complete Minutes 1 to 3 days
    Seller confidence Low High

    Always aim for a full pre-approval, not just pre-qualification. Sellers and real estate agents know the difference.

    What You Need to Get Pre-Approved

    Lenders will ask you to provide documents that prove your income, assets, and identity. Gather these before you start the process to speed things up.

    Income Documents

    • W-2 forms from the last 2 years
    • Federal tax returns from the last 2 years
    • Recent pay stubs (last 30 days)
    • If self-employed: 2 years of tax returns plus a profit and loss statement

    Asset Documents

    • Bank statements from the last 2 to 3 months (all accounts)
    • Investment account statements
    • Retirement account statements
    • Gift letter if you are receiving down payment help from family

    Debt Information

    • Statements for any existing loans (auto, student, personal)
    • Credit card statements
    • Any other monthly obligations

    Identity Documents

    • Government-issued photo ID (driver’s license or passport)
    • Social Security number

    What Lenders Look At

    Lenders evaluate four key areas when reviewing your pre-approval application.

    1. Credit Score

    Your credit score is one of the first things a lender checks. Here are the minimums for common loan types:

    Loan Type Minimum Credit Score
    Conventional 620
    FHA 580 (3.5% down) or 500 (10% down)
    VA 580 to 620 (lender-set)
    USDA 640 (lender-set)

    A higher score gets you better rates. Moving from 620 to 740 can reduce your mortgage rate by 0.5% or more, saving tens of thousands over the life of the loan. See our full guide on how to improve your credit score if you want to boost it before applying.

    2. Income and Employment

    Lenders want to see steady income. Most require 2 years of employment history in the same field. If you recently changed jobs, that is usually fine as long as you stayed in the same industry.

    Self-employed borrowers face more scrutiny. Lenders average your last 2 years of net income from tax returns. Recent income increases may not count if your tax returns do not reflect them yet.

    3. Debt-to-Income Ratio

    Your DTI is your total monthly debt payments divided by your gross monthly income. Most conventional lenders want a back-end DTI under 43%. FHA and VA can go higher with strong compensating factors.

    A lower DTI means more loan options and better rates.

    4. Down Payment and Assets

    Lenders want to see that you have enough for the down payment plus closing costs. They also want to see reserves, meaning money left over in your accounts after closing. Two to three months of mortgage payments in savings is a common requirement.

    Soft Pull vs. Hard Pull: What Happens to Your Credit

    Pre-approval requires a hard inquiry on your credit. This can drop your score by 2 to 5 points temporarily.

    If you shop multiple lenders for the best rate, do it within a 14 to 45 day window. Credit scoring models treat multiple mortgage inquiries within that window as a single inquiry. This protects you when rate shopping.

    How to Get the Best Pre-Approval

    Step 1: Check and improve your credit before applying. Pull your free report from AnnualCreditReport.com. Dispute any errors. Pay down credit card balances if possible. Give yourself 30 to 60 days to boost your score if you have time.

    Step 2: Calculate your budget. Use a mortgage calculator to estimate your monthly payment. Factor in property taxes, homeowners insurance, and HOA fees in addition to principal and interest.

    Step 3: Gather your documents. Prepare everything on the document list above before you contact any lender. Having documents ready speeds up the process significantly.

    Step 4: Shop at least 3 lenders. Rates and fees vary more than most buyers realize. Getting quotes from 3 or more lenders can save $1,000 or more over the life of the loan.

    Step 5: Submit your application. The lender will pull your credit, verify your documents, and issue a decision. This usually takes 1 to 3 business days.

    Step 6: Receive your pre-approval letter. The letter specifies the loan amount, loan type, and expiration date. Share it with your real estate agent and include it with any offers.

    How Long Does Pre-Approval Last?

    Most pre-approval letters are valid for 60 to 90 days. If your letter expires before you find a home, contact your lender to renew it. They may need updated pay stubs and bank statements.

    What Can Kill a Pre-Approval

    Getting pre-approved is not a guarantee your loan will close. Several things can cause problems between pre-approval and closing.

    • Taking on new debt: Do not buy a car, furniture, or take out any loans while under contract.
    • Job loss: Losing your job after pre-approval can make the loan fall through.
    • Large unexplained deposits: Lenders will ask about big deposits in your bank account. Document the source.
    • Credit score drop: Maxing out a credit card or missing a payment after pre-approval can cause problems.
    • Property issues: If the appraisal comes in low or the home has major defects, the loan may not close as expected.

    Related Reading

    Once you have your pre-approval, explore your loan type options. See our guides on best first-time homebuyer loan programs and FHA loan requirements to find the right fit for your situation.

    Frequently Asked Questions

    How long does mortgage pre-approval take?

    Most lenders issue a pre-approval letter within 1 to 3 business days after you submit all required documents. Some online lenders can do it same-day.

    Does mortgage pre-approval hurt your credit?

    Yes, a pre-approval causes a hard credit inquiry, which can lower your score by a few points. However, multiple mortgage inquiries within a 14 to 45 day window are treated as a single inquiry by most scoring models.

    What credit score do I need to get pre-approved for a mortgage?

    Most conventional loans require a minimum of 620. FHA loans allow scores as low as 580 with 3.5% down. VA and USDA loans have no official minimum but lenders usually require 580 to 640.

    How long is a pre-approval letter good for?

    Most pre-approval letters are valid for 60 to 90 days. After that, you may need to update your documents and get a new letter if you have not found a home yet.

    What is the difference between pre-qualification and pre-approval?

    Pre-qualification is a quick estimate based on unverified information you provide. Pre-approval involves a full credit check and document review. Pre-approval is much stronger and sellers take it more seriously.

    Rates as of May 2026.

    Related Articles

  • Best Store Credit Cards Worth Having in 2026

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    Store Credit Cards: Worth It or Not?

    Store credit cards get a bad reputation. Some deserve it. Others offer real value if you shop at the right places. This guide breaks down the best store credit cards in 2026, the ones to avoid, and how to decide if a store card is right for you.

    Best Store Credit Cards in 2026

    1. Amazon Prime Rewards Visa Signature Card

    Rewards: 5% back at Amazon and Whole Foods (with Prime membership), 2% at restaurants, gas stations, and drugstores, 1% everywhere else
    Annual fee: $0 (Prime membership required, $139 per year)
    APR: 19.99% to 28.74%

    If you already pay for Amazon Prime, this card is a no-brainer. The 5% back at Amazon stacks up fast, especially for households that do most of their shopping there. The card also earns rewards at restaurants and gas, which makes it useful outside of Amazon.

    2. Target RedCard (Credit Version)

    Rewards: 5% off every Target purchase
    Annual fee: $0
    APR: 29.95%

    The Target RedCard gives 5% off every purchase at Target and Target.com, including groceries, household items, and clothing. The discount applies immediately at checkout, so you do not have to track points. The APR is very high, so always pay in full.

    3. Costco Anywhere Visa Card by Citi

    Rewards: 4% on eligible gas worldwide, 3% on restaurants and travel, 2% on all Costco purchases, 1% everywhere else
    Annual fee: $0 (Costco membership required, $65 to $130 per year)
    APR: 20.49%

    The Costco Citi card is one of the best cards for gas rewards. If you drive a lot and shop at Costco, this card earns serious rewards. The rewards come as a certificate once per year, which some people find inconvenient but the value is there.

    4. My Best Buy Visa Card

    Rewards: 5% back in Best Buy rewards (or 6% with Elite Plus status), 3% on gas, 2% on dining, 1% everywhere else
    Annual fee: $0 or $59
    APR: 29.49%

    Best for frequent Best Buy shoppers. The 5% back on electronics and appliances adds up fast. Be careful of the high APR and the fact that rewards are only usable at Best Buy.

    5. Home Depot Consumer Credit Card

    Rewards: No standard rewards program
    Annual fee: $0
    APR: 17.99% to 26.99%
    Benefit: 0% financing offers on large purchases

    The Home Depot card does not earn points. Its main benefit is deferred interest financing on large purchases, often 6 to 24 months with 0% interest if paid in full. This is useful for big home improvement projects, but risky if you do not pay it off before the promotional period ends.

    Comparison Table

    Card Best Reward Rate Annual Fee Best For
    Amazon Prime Rewards Visa 5% at Amazon $0 + Prime Heavy Amazon shoppers
    Target RedCard 5% at Target $0 Regular Target shoppers
    Costco Citi Card 4% on gas $0 + Costco Gas + Costco buyers
    My Best Buy Visa 5% at Best Buy $0 or $59 Electronics buyers
    Home Depot Card Financing only $0 Home improvement projects

    Store Cards to Avoid

    Not every store card is worth having. Here are warning signs.

    APRs above 30%: Several store cards from fashion retailers charge 30% to 34% APR. One missed payment can cost you more than the rewards you earned.

    Rewards only usable in-store: Some cards earn points that can only be redeemed at one store. If the store goes out of business or you stop shopping there, your rewards become worthless.

    Deferred interest offers: This is different from true 0% APR. With deferred interest, all the interest accrues in the background. If you do not pay it off before the promotional period ends, all that interest gets added to your balance at once. This is common at furniture stores and electronics retailers.

    How Store Cards Affect Your Credit Score

    Store cards affect your credit the same way general-purpose cards do. Opening a card adds a hard inquiry, which temporarily dips your score by a few points. Over time, responsible use can help your score by adding available credit and a positive payment history.

    Because store cards often have lower credit limits, it is easy to have high utilization. A $500 limit with a $300 balance is 60% utilization, which hurts your score. Keep your balance low relative to the limit.

    For better everyday rewards with more flexibility, see our guide to the best cash back credit cards for everyday spending in 2026.

    Should You Get a Store Credit Card?

    A store card makes sense if:

    • You shop at that store regularly, at least once or twice a month
    • The card has no annual fee or the rewards easily cover the fee
    • You always pay the balance in full to avoid the high APR
    • The rewards are usable as cash or have real value to you

    A store card does NOT make sense if:

    • You are opening it just for a one-time signup discount
    • You tend to carry a balance from month to month
    • The APR is above 28% and you cannot guarantee you will pay in full
    • The rewards only work at a store you rarely visit

    Store Cards vs. Cash Back Cards

    A general cash back card like the Citi Double Cash earns 2% on everything, with no store restrictions. A store card can beat that at specific retailers, often earning 5% at that store. But a cash back card is more flexible and usually has a lower APR.

    The best approach for most people is a strong general cash back card for most spending, plus one or two store cards for their most-used retailers. This maximizes rewards without overcomplicating your wallet.

    For improving your credit score to qualify for better cards, see our step-by-step guide on how to improve your credit score in 2026.

    Frequently Asked Questions

    Are store credit cards worth it?

    Some are. The best store cards offer 5% or more back at specific retailers with no annual fee. The worst ones have APRs above 30% and rewards that are only usable at one store. Stick to cards from stores you already shop at regularly.

    What credit score do you need for a store credit card?

    Most store cards accept fair credit scores around 580 to 640. Some are easier to get than general-purpose credit cards, making them a decent option for credit building.

    What is the best store credit card?

    The Amazon Prime Rewards Visa and the Target RedCard are widely considered the best store credit cards because of their high reward rates and broad usability.

    Do store credit cards hurt your credit?

    Applying causes a hard inquiry, which dips your score by a few points. But using the card responsibly and keeping the balance low helps your credit over time.

    Should I close a store credit card I do not use?

    Usually no. Closing an old card reduces your available credit and can shorten your credit history. Keep it open unless it has an annual fee that is not worth paying.

    Rates as of May 2026.

    Not sure which card fits your situation?

    Answer a few questions and our free AI tool finds the best card for your credit score and spending habits in seconds.

    Find My Best Card

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  • How to Use a Balance Transfer to Pay Off Debt Faster

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    What Is a Balance Transfer?

    A balance transfer moves debt from one credit card to another, usually one with a lower interest rate. The best balance transfer cards offer 0% APR for a limited time, often 12 to 21 months. During that period, every dollar you pay goes toward the principal, not interest.

    If you carry high-interest credit card debt, a balance transfer can be one of the fastest ways to pay it off.

    How a Balance Transfer Works: Step by Step

    Step 1: Check your current balance and APR. Know exactly how much you owe and what interest rate you are paying. This helps you calculate how much a transfer will save you.

    Step 2: Find a balance transfer card with a long 0% APR period. Look for cards offering 15 months or more at 0%. The longer the window, the more time you have to pay off the debt interest-free.

    Step 3: Apply for the card. You typically need good credit (670 or higher) for the best balance transfer offers.

    Step 4: Request the transfer. Once approved, contact the new card issuer and give them your old card account number and the amount you want to transfer. The issuer pays off your old card and adds the balance to your new card.

    Step 5: Pay down the balance during the 0% period. Divide your balance by the number of months in the promotional period. That is your monthly payment target to pay it off in full before interest kicks in.

    Step 6: Stop using the old card. Do not run up new debt on the card you just paid off. This defeats the purpose of the transfer.

    Balance Transfer Fees: What You Will Pay

    Almost every balance transfer card charges a fee. This is typically 3% to 5% of the amount transferred.

    Balance Transferred 3% Fee 5% Fee
    $2,000 $60 $100
    $5,000 $150 $250
    $10,000 $300 $500
    $15,000 $450 $750

    Even with the fee, a balance transfer is almost always worth it when you are moving away from a card charging 22% to 29% APR. The fee is a one-time cost. The interest on a high-rate card keeps compounding every month.

    How Much Can You Save?

    Here is a real example. You have $6,000 on a credit card at 24% APR. You are making the minimum payment of $150 per month.

    At that pace, it would take over 5 years to pay off and cost you about $2,800 in interest.

    Now imagine you transfer that $6,000 to a card with 0% APR for 18 months. You pay a 3% fee of $180. You commit to paying $340 per month to clear it in 18 months.

    Total interest paid: $0. Total fees paid: $180. Total savings: about $2,620.

    Best Balance Transfer Cards in 2026

    For a full comparison of top options, see our guide to the best balance transfer credit cards with no annual fee in 2026. Here are the highlights.

    Citi Simplicity Card: 0% intro APR for 21 months on balance transfers, no late fees, no annual fee. One of the longest promotional periods available.

    Chase Slate Edge: 0% intro APR for 18 months with no balance transfer fee in the first 60 days. The waived fee is a big advantage for large transfers.

    Wells Fargo Reflect Card: Up to 21 months of 0% intro APR with good payment history, no annual fee.

    Discover it Balance Transfer: 0% intro APR for 18 months, 3% transfer fee, and cash back rewards. One of the few balance transfer cards that also earns rewards.

    When Does a Balance Transfer Make Sense?

    A balance transfer is a smart move when:

    • You have credit card debt at 18% APR or higher
    • You have a plan to pay it off within the promotional period
    • Your credit score qualifies you for a 0% offer
    • The balance transfer fee is less than what you would pay in interest by staying put

    A balance transfer is NOT the right move when:

    • You will continue to add new charges to the card
    • You cannot realistically pay it off before the 0% period ends
    • The transfer fee plus the regular APR makes it cost more than staying on your current card
    • Your credit score is too low to qualify for a good offer

    Balance Transfer vs. Debt Consolidation Loan

    Both are solid strategies for paying off high-interest debt. Here is how they compare.

    Feature Balance Transfer Card Debt Consolidation Loan
    Interest rate 0% intro, then 20%+ regular Fixed rate, often 8% to 20%
    Credit score needed 670+ for best offers 580+ for some lenders
    Fees 3% to 5% transfer fee 0% to 10% origination fee
    Payoff timeline Must finish before promo ends Fixed term, no deadline pressure
    Best for Credit card debt under $15,000 Larger debts or multiple lenders

    For a deeper look at both options, read our guide: Debt Consolidation Loan vs Balance Transfer: Which Is Better?

    Tips to Make a Balance Transfer Work

    Create a payoff schedule. Divide the balance by the number of 0% months. Set up autopay for that amount.

    Do not use the new card for new purchases. Many cards charge regular APR on new purchases even during the 0% balance transfer period. Keep the new card for payoff only.

    Keep the old card open. Closing the old card reduces your total available credit and can hurt your credit score. Leave it open and unused, or use it occasionally for a small purchase.

    Act quickly. Transfer the balance within the window specified by the card (usually 60 to 120 days of account opening) to get the promotional rate.

    Do not miss payments. Missing a payment can end your promotional rate immediately and trigger the regular APR. Always pay at least the minimum on time.

    Frequently Asked Questions

    Is a balance transfer a good idea?

    Yes, if you have high-interest credit card debt and can pay it off within the promotional period. A 0% APR balance transfer can save you hundreds or thousands in interest.

    What credit score do I need for a balance transfer card?

    Most balance transfer cards require good to excellent credit, typically 670 or higher. Some cards are available at 640, but the best 0% APR offers usually require 700 or above.

    What is the balance transfer fee?

    Most cards charge 3% to 5% of the transferred amount. On a $5,000 balance, that is $150 to $250. This fee is almost always worth paying if you are moving away from a 20%+ APR card.

    Can I transfer a balance between cards at the same bank?

    No. Most credit card issuers do not allow you to transfer balances between their own cards. You need to move the balance to a card at a different bank.

    What happens if I do not pay off the balance before the promotional period ends?

    The remaining balance starts accruing interest at the card’s regular APR, which can be 20% or higher. Always have a payoff plan in place before you transfer.

    Rates as of May 2026.

    Not sure which card fits your situation?

    Answer a few questions and our free AI tool finds the best card for your credit score and spending habits in seconds.

    Find My Best Card

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  • Best Credit Cards for Rebuilding Credit After Bankruptcy 2026

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    Rebuilding Credit After Bankruptcy: Where to Start

    Bankruptcy can feel like a financial reset. Your credit score takes a big hit, but it is not permanent. With the right credit card and good habits, you can rebuild your credit faster than you might think.

    The key is knowing which cards will approve you, which fees are reasonable, and how to use the card to build the best score possible.

    What to Look for in a Post-Bankruptcy Credit Card

    Not all cards are equal after bankruptcy. Here is what matters most.

    • Reports to all three bureaus: Experian, Equifax, and TransUnion. A card that only reports to one bureau builds your credit more slowly.
    • Low or no annual fee: You do not need to pay a lot to rebuild credit. Avoid cards with fees above $75 per year.
    • Reasonable deposit requirements: Secured cards require a deposit. Look for cards that allow low minimums of $200 or less.
    • Upgrade path: Cards that offer a path to an unsecured card after 12 months of good behavior save you the hassle of applying again later.
    • No predatory fees: Avoid cards that charge monthly maintenance fees on top of the annual fee.

    Best Secured Cards for Rebuilding Credit After Bankruptcy

    1. Discover it Secured Credit Card

    Annual fee: $0
    Minimum deposit: $200
    Reports to: All 3 bureaus
    Upgrade path: Yes, reviews begin at 7 months

    The Discover it Secured card is one of the best overall options after bankruptcy. It has no annual fee, earns cash back rewards, and automatically reviews your account for an upgrade to an unsecured card.

    You earn 2% cash back at gas stations and restaurants and 1% on everything else. For a secured card, this is exceptional. Discover also doubles all cash back earned in your first year.

    2. Capital One Platinum Secured Credit Card

    Annual fee: $0
    Minimum deposit: $49, $99, or $200 depending on creditworthiness
    Reports to: All 3 bureaus
    Upgrade path: Yes, after 6 months

    Capital One is known for working with borrowers who have damaged credit. Their Platinum Secured card may require as little as a $49 deposit for some applicants. The card automatically considers you for a higher credit limit after 6 months of on-time payments.

    3. OpenSky Secured Visa Credit Card

    Annual fee: $35
    Minimum deposit: $200
    Reports to: All 3 bureaus
    No credit check required: Yes

    OpenSky does not check your credit at all when you apply. There is no credit inquiry, which means bankruptcy is not a factor in approval. This makes it one of the most accessible cards after bankruptcy. The $35 annual fee is reasonable for the access it provides.

    4. Chime Credit Builder Secured Visa

    Annual fee: $0
    Minimum deposit: No minimum
    Reports to: All 3 bureaus
    Requires Chime checking account: Yes

    Chime Credit Builder has no annual fee and no minimum deposit. Your spending limit equals whatever you move into the Credit Builder account each month. Chime reports to all three bureaus and the card works anywhere Visa is accepted. You need a Chime spending account to qualify.

    Comparison Table

    Card Annual Fee Min Deposit Credit Check Upgrade Path
    Discover it Secured $0 $200 Yes Yes, at 7 months
    Capital One Platinum Secured $0 $49+ Yes Yes, at 6 months
    OpenSky Secured Visa $35 $200 No Limited
    Chime Credit Builder $0 None Yes No

    Secured vs. Unsecured Cards After Bankruptcy

    A secured card requires a cash deposit. That deposit becomes your credit limit. It protects the bank if you do not pay.

    An unsecured card does not require a deposit. Most unsecured cards for bad credit carry high fees and very high APRs.

    After bankruptcy, start with a secured card. The fees are lower, approval is easier, and many secured cards upgrade you to unsecured after 12 months. This is a much cleaner path than an unsecured bad credit card.

    For a full comparison of options for damaged credit, see our guide to the best secured credit cards to build credit in 2026.

    How to Use Your Card to Rebuild Credit Fast

    Getting the card is step one. How you use it matters just as much.

    Use the card every month. Make one or two small purchases. This keeps the account active and shows recent payment history.

    Keep utilization below 30%. If your limit is $500, keep the balance under $150. Under 10% is even better for your score.

    Pay the full balance every month. You do not need to carry a balance to build credit. Paying in full avoids interest and keeps your utilization low.

    Set up autopay. Missing one payment can set back your rebuilding progress by months. Autopay for at least the minimum prevents this.

    Do not apply for more cards right away. Every application causes a hard inquiry. Space your applications at least 6 months apart.

    The 6 to 12 Month Rebuilding Timeline

    Month 1 to 3: Open a secured card and use it lightly. Pay in full. Your score may still look rough due to the bankruptcy.

    Month 4 to 6: Your payment history is building. Keep utilization very low. You may start to see small score improvements.

    Month 7 to 12: Many secured cards review you for an upgrade at this point. Your score may reach 580 to 620 if you have been consistent.

    Year 2: With no missed payments, your score can reach 650 to 680. The bankruptcy is still there, but its weight fades each year.

    Year 4 and beyond: Many borrowers reach 700 or higher. Chapter 13 falls off your report at year 7. Chapter 7 falls off at year 10.

    What to Avoid After Bankruptcy

    Avoid credit repair scams. No company can legally remove accurate bankruptcy information from your report. Anyone who promises otherwise is lying.

    Avoid cards with huge fees. Some predatory unsecured cards charge $75 or more in annual fees plus monthly fees. These leave very little of your credit limit available to use.

    Avoid maxing out your card. High utilization is one of the fastest ways to keep your score low. Even if you pay in full, a high balance before the statement closes hurts your score.

    For more options at different credit levels, see our guide to the best credit cards for bad credit in 2026.

    Frequently Asked Questions

    How soon after bankruptcy can I get a credit card?

    You can apply for a secured credit card immediately after your bankruptcy is discharged. Most secured cards are available even with a bankruptcy on your record.

    What is the best credit card after Chapter 7 bankruptcy?

    Secured cards from Discover, Capital One, and OpenSky are among the best options after Chapter 7 bankruptcy. They report to all three bureaus and have reasonable fees.

    How long does bankruptcy stay on your credit report?

    Chapter 7 bankruptcy stays on your credit report for 10 years. Chapter 13 stays for 7 years. The impact on your score fades over time as you build new positive history.

    Should I get a secured or unsecured card after bankruptcy?

    Start with a secured card. Most unsecured cards require a better credit profile than you will have right after bankruptcy. A secured card helps you rebuild and often upgrades to unsecured after 12 months.

    How long does it take to rebuild credit after bankruptcy?

    With consistent on-time payments and low utilization, most people can reach a good credit score of 680 to 700 within 2 to 4 years after bankruptcy.

    Rates as of May 2026.

    Not sure which card fits your situation?

    Answer a few questions and our free AI tool finds the best card for your credit score and spending habits in seconds.

    Find My Best Card

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  • Best Personal Loans for Bad Credit 2026

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    Can You Get a Personal Loan with Bad Credit?

    Yes. Getting a personal loan with bad credit is possible. Many lenders now look beyond your credit score. They also consider your income, employment, and ability to repay.

    Bad credit usually means a score below 580. Expect higher interest rates. But if you need money for an emergency, debt consolidation, or a major expense, there are legitimate options available.

    Check Your Rate Now — No Hard Credit Pull

    These lenders specialize in bad-credit borrowers. Checking rates is free and takes under 2 minutes.

    Lender Best For Get Rate
    Low Credit Finance Very bad credit, low income accepted Check Rate
    TribalLoans No minimum credit score, same-day funding Check Rate
    BorrowMoney.us Match with 100+ lenders, up to $35,000 Check Rate

    Sponsored. Rates shown are for illustrative purposes. Approval not guaranteed.

    Best Personal Loans for Bad Credit in 2026

    1. Avant: Best Overall for Bad Credit

    Min. credit score: 550
    Loan amounts: $2,000 to $35,000
    APR range: 9.95% to 35.99%
    Loan terms: 24 to 60 months

    Avant is one of the best lenders for borrowers with fair to poor credit. They accept scores as low as 550 and fund loans as fast as the next business day. Avant charges an administration fee of up to 9.99%, so factor that into the total cost.

    Read our full Avant Personal Loan Review 2026 for a deeper look.

    2. Upstart: Best for Thin Credit Files

    Min. credit score: 300 (varies by state)
    Loan amounts: $1,000 to $50,000
    APR range: 7.80% to 35.99%
    Loan terms: 36 or 60 months

    Upstart uses AI to evaluate borrowers. It looks at your education, job history, and other factors beyond your credit score. This makes it one of the best options if you have a limited credit history. Rates can be high for bad credit borrowers, but approval rates are strong.

    Read our full Upstart Personal Loan Review 2026 for details.

    3. OneMain Financial: Best for In-Person Service

    Min. credit score: None specified
    Loan amounts: $1,500 to $20,000
    APR range: 18.00% to 35.99%
    Loan terms: 24 to 60 months

    OneMain Financial has hundreds of branch locations. If you prefer to talk to someone in person, OneMain is a good pick. They work with very low credit scores and also offer secured loan options if you want to put up a vehicle as collateral to get a better rate.

    4. LendingPoint: Best for Scores Around 585

    Min. credit score: 585
    Loan amounts: $2,000 to $36,500
    APR range: 7.99% to 35.99%
    Loan terms: 24 to 72 months

    LendingPoint looks at cash flow and recent financial trends, not just your score. If your score has been improving, they may give you better terms than expected. Fast funding is also a plus, with most loans funded within 1 business day.

    5. Universal Credit: Best for Debt Consolidation with Bad Credit

    Min. credit score: 560
    Loan amounts: $1,000 to $50,000
    APR range: 11.69% to 35.99%
    Loan terms: 36 to 60 months

    Universal Credit specializes in debt consolidation loans for borrowers with poor to fair credit. They can pay your creditors directly, making it a solid choice if you are trying to clean up multiple debts.

    Comparison Table

    Lender Min. Score Loan Range Max APR
    Avant 550 $2,000 to $35,000 35.99%
    Upstart 300 $1,000 to $50,000 35.99%
    OneMain Financial None listed $1,500 to $20,000 35.99%
    LendingPoint 585 $2,000 to $36,500 35.99%
    Universal Credit 560 $1,000 to $50,000 35.99%

    What to Expect with a 580 Credit Score

    A 580 score puts you in the fair credit range. Getting approved is possible with the right lender. But here is what to expect.

    Higher interest rates. You will pay more than a borrower with good credit. APRs for borrowers in the 550 to 620 range often fall between 25% and 36%.

    Smaller loan amounts. Lenders may approve you for less than you requested. Start with the amount you truly need, not the max you can borrow.

    Origination fees. Many bad credit lenders charge origination fees of 1% to 10% of the loan amount. This fee is taken from your loan proceeds before you receive the funds.

    To learn more about what lenders want from borrowers at this score level, read our guide: Can You Get a Personal Loan with a 580 Credit Score?

    How to Compare Bad Credit Personal Loans

    Do not just look at the monthly payment. Here are the numbers that matter most.

    APR (Annual Percentage Rate): This includes the interest rate plus any fees. Always compare APR, not just the interest rate.

    Origination fee: Charged upfront, often deducted from the loan. A $5,000 loan with a 5% fee means you receive $4,750 but owe $5,000.

    Prepayment penalty: Some lenders charge a fee if you pay off early. Look for loans with no prepayment penalty.

    Funding speed: If you need money fast, look for lenders that fund same day or next business day.

    How to Improve Your Approval Odds

    Add a cosigner. A cosigner with good credit can get you approved and lower your rate. They are equally responsible for the loan if you do not pay.

    Apply for a secured loan. Using a car or savings account as collateral reduces lender risk. This often means lower rates and easier approval.

    Borrow only what you need. Smaller loan amounts are easier to approve. Do not request more than you actually need.

    Check your report for errors first. Errors on your credit report can make your score look worse than it is. Dispute any mistakes before you apply.

    Prequalify before applying. Most lenders offer a soft pull prequalification. This lets you check likely rates without hurting your credit score.

    Alternatives to Bad Credit Personal Loans

    If you cannot get approved or the rates are too high, consider these options.

    Credit union loans. Credit unions often offer more flexible terms for members with poor credit. They are nonprofit and tend to charge lower rates than traditional banks.

    Peer-to-peer lending. Platforms like Prosper connect borrowers with individual investors who fund loans. Standards can be more flexible.

    Family or friend loan. Borrowing from someone you trust can work, but put the agreement in writing to protect the relationship.

    Paycheck advance apps. For very small amounts under $500, apps like Earnin or Dave can bridge a gap without a hard credit pull.

    Frequently Asked Questions

    Can I get a personal loan with a 580 credit score?

    Yes. Several lenders including Avant, Upstart, and OneMain Financial accept applicants with scores as low as 580 or even lower. Rates will be higher, but approval is possible.

    What is the easiest personal loan to get with bad credit?

    OneMain Financial and Avant are among the easiest for bad credit borrowers. They look at more than just your credit score and have physical branches for in-person support.

    How much can I borrow with bad credit?

    Most bad credit personal loans range from $1,000 to $10,000. Some lenders like Avant go up to $35,000 for qualified borrowers, even with fair credit.

    Do bad credit personal loans require collateral?

    Most personal loans are unsecured, meaning no collateral is required. However, secured personal loans are available and can get you better rates if you have an asset to use.

    What APR should I expect with bad credit?

    With a credit score below 580, expect APRs ranging from 20% to 36% or higher. The exact rate depends on your income, debt load, and the lender.

    Rates as of May 2026.

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  • Marcus vs SoFi Personal Loan: Which Is Better in 2026?

    Affiliate Disclosure: This article contains affiliate links. If you apply for a loan or credit card through our links, we may earn a commission at no extra cost to you. We only recommend products we have researched and believe are worth your time.

    Marcus vs SoFi: Which Personal Loan Is Right for You?

    Both Marcus by Goldman Sachs and SoFi are strong personal loan lenders with no origination fees and competitive rates. But they serve slightly different borrowers. This side-by-side comparison shows you which one fits your situation best.

    Quick Comparison

    Feature Marcus SoFi
    Loan amounts $3,500 to $40,000 $5,000 to $100,000
    APR range 6.99% to 24.99% 8.99% to 29.99%
    Loan terms 36 to 72 months 24 to 84 months
    Origination fee None None
    Late fee None None
    Min. credit score 660 680
    Funding speed 1 to 4 business days Same or next day
    Cosigner allowed No Yes
    Unemployment protection Payment deferral option Forbearance program

    Marcus Personal Loan: Overview

    Marcus is the consumer lending arm of Goldman Sachs. It launched in 2016 and built a reputation for being simple, transparent, and fee-free.

    What makes Marcus stand out:

    • Zero fees: no origination fee, no late fee, no prepayment penalty
    • On-time payment reward: pay 12 consecutive months on time and you can defer one payment
    • Fixed rates: your rate never changes after you lock in
    • No hard credit pull for prequalification

    Where Marcus falls short:

    • Maximum loan amount is $40,000, lower than SoFi
    • No cosigner option
    • Funding can take up to 4 business days

    Read our full Marcus Personal Loan Review 2026 for a complete breakdown.

    SoFi Personal Loan: Overview

    SoFi started as a student loan refinancing company and has grown into a full financial platform. Its personal loan product stands out for its high loan limits and member benefits.

    What makes SoFi stand out:

    • High loan limits: up to $100,000
    • Long terms: up to 84 months
    • Member benefits: career coaching, financial planning, and unemployment protection
    • Cosigners allowed
    • Same-day or next-day funding in many cases

    Where SoFi falls short:

    • Minimum loan amount of $5,000 is higher than Marcus
    • Higher minimum APR than some competitors
    • Better suited for borrowers with excellent credit

    Read our full SoFi Personal Loan Review 2026 for a complete breakdown.

    Rates and APR Comparison

    Both lenders offer competitive rates for good credit borrowers. Here is what to expect based on credit score.

    Credit Score Range Estimated Marcus APR Estimated SoFi APR
    760 and above 6.99% to 9.99% 8.99% to 12.99%
    720 to 759 10.99% to 14.99% 12.99% to 17.99%
    680 to 719 15.99% to 19.99% 17.99% to 22.99%
    660 to 679 20.99% to 24.99% Not typically approved

    These are estimates. Your actual rate depends on your income, debt load, and full credit profile.

    Fees: Both Win Here

    Neither Marcus nor SoFi charge origination fees, late payment fees, or prepayment penalties. This puts both well above most personal loan lenders in terms of transparency.

    Avoiding an origination fee on a $20,000 loan saves you $200 to $2,000 compared to lenders who charge 1% to 10% upfront.

    Loan Amounts

    Need a large loan? SoFi wins. It offers up to $100,000, making it one of the few personal lenders that can handle major expenses like home renovations or large debt consolidation.

    Need a smaller loan? Marcus starts at $3,500 while SoFi starts at $5,000. For amounts between $3,500 and $5,000, Marcus is your only option here.

    Repayment Terms

    SoFi offers terms up to 84 months. That is 7 years. A longer term means lower monthly payments, but you pay more interest over time.

    Marcus caps at 72 months. Still plenty of flexibility, but slightly more limited.

    For most borrowers, a 36 to 60 month term strikes the right balance between manageable payments and reasonable total interest paid.

    Cosigners

    SoFi allows cosigners. This is a significant advantage if your credit score is on the lower end of the qualifying range or your income alone does not meet requirements.

    Marcus does not allow cosigners. You need to qualify on your own merits.

    Hardship Programs

    Both lenders offer some protection if you lose your job or face financial hardship.

    Marcus lets you defer one payment after 12 consecutive on-time payments. You can also request payment relief during a financial hardship.

    SoFi offers an unemployment protection program. If you lose your job, SoFi may pause your payments in 3-month increments while you look for work. This is a major benefit that most lenders do not offer.

    Who Should Choose Marcus?

    • You want a zero-fee loan with no surprises
    • You need between $3,500 and $40,000
    • You have a score in the 660 to 700 range
    • You want the on-time payment reward feature
    • You do not need a cosigner

    Who Should Choose SoFi?

    • You need more than $40,000
    • You want member benefits like career coaching or financial planning
    • You have excellent credit and want the best possible rate
    • You need fast same-day funding
    • You want the option to add a cosigner
    • You want unemployment protection built in

    Bottom Line

    For most borrowers with good credit who need $10,000 to $30,000, Marcus is a simpler, slightly more accessible choice. For borrowers with excellent credit who need a large loan or want premium member perks, SoFi is the stronger option.

    Both are excellent. Prequalify with both to see your actual rate before committing. The rate you get will often make the decision for you.

    For more options, see our full guide to the best personal loans of 2026.

    Frequently Asked Questions

    Is Marcus or SoFi better for personal loans?

    SoFi is better for borrowers with excellent credit who want large loans up to $100,000 and member perks. Marcus is better for those who want no fees, predictable terms, and a simple borrowing experience.

    What credit score do you need for a Marcus loan?

    Marcus recommends a minimum score of 660 but borrowers with scores of 700 or higher tend to get the best rates.

    What credit score do you need for a SoFi personal loan?

    SoFi recommends a minimum credit score of 680. Most approved borrowers have scores above 700.

    Does Marcus charge any fees?

    No. Marcus has no origination fees, no late fees, and no prepayment penalties. This makes it one of the most transparent lenders available.

    Can I get a personal loan from both Marcus and SoFi?

    You can technically apply to both, but having two large personal loans at once may affect your debt-to-income ratio and hurt future approval odds.

    Rates as of May 2026.

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