SoFi (short for Social Finance) is a leader in the world of tech-based mortgages. Specializing in high-income borrowers with nontraditional credit, this lender has created unique opportunities and benefits for its mortgage customers.
Whether you’re looking for a traditional mortgage or a unique adjustable rate product, SoFi has a slew of offerings.
Keep reading to find out more about what kind of home loans are offered by SoFi, how you can qualify, and what kind of perks come along with choosing this lender.
Mortgage Application Requirements
In some ways, SoFi has stricter lending requirements compared to other lenders, and in other ways, they’re easier. To start, all home loans require a 10% down payment. SoFi mortgages are reserved for high-income borrowers, which may be why the minimum loan amount is $100,000.
There are, however, flexible debt-to-income limits. So even if you have hefty student loan obligations, your chances for getting a house aren’t as limited as you may have initially thought.
Where you live also affects whether or not you can apply for a SoFi mortgage. SoFi is only licensed to originate mortgages in the following states:
Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington, D.C., Wisconsin, and Wyoming.
Types of Home Loans Available
For some borrowers, they may be put off by the fact that SoFi doesn’t offer any government loans. So you can’t get an FHA, VA, or USDA loan. What they do offer, however, may be more attractive to SoFi’s target audience of high-income borrowers in competitive real estate markets.
Here are the four types of mortgages you can apply for through SoFi.
30-year Fixed-Rate Mortgage
This is a standard mortgage product for any lender to offer, and SoFi is no different. Because the interest rate is fixed, your payments won’t change over the course of your loan. The minimum down payment required is 10% and there’s no PMI paid by the borrower. On top of that, you can check out up-to-date mortgage rates on their website. It’s a popular option that offers stability along with spread-out payments.
15-year Fixed-Rate Mortgage
Like a 30-year fixed-rate mortgage, your payment remains stable because your interest rate doesn’t change. The major difference is that you can realize significant interest savings if you can manage the higher payments. That’s because interest rates are usually less with a 15-year mortgage. Plus, you’re repaying the loan over a shorter period of time, so the interest has less time to accumulate.
Of course, because of that shorter window for repayment, your monthly payments will be higher compared to a 30-year mortgage. Still, if it’s a manageable amount, it’s worth comparing your options to find out how much you’ll pay (or save) in interest.
The 7/1 ARM is SoFi’s only straightforward adjustable-rate mortgage available. Like the first two loans, the minimum down payment is also just 10%. For the first seven years of your loan, you’ll enjoy a fixed interest rate. After that, however, the rate adjusts on an annual basis for the rest of the 30-year loan.
The largest benefit with this type of mortgage is that interest on a 7/1 ARM starts off much lower than with a fixed rate. If you plan on moving from your house or refinancing within seven years, it could be a smart choice to save money in the near-term.
It’s just important that you have financial backup in case your plans change and you’re stuck with the mortgage during some or all of the adjusting years.
5/1 ARM – Interest Only
The interest-only 5/1 ARM from SoFi is a slightly more sophisticated mortgage product but can work well for a variety of borrowers. For the first ten years, your payments only include interest on the loan. After that period, you’ll begin paying back on the principal for the remaining 20 years.
On top of that, your interest rate will be fixed for the first five years. After that, it starts to adjust once a year for every remaining year of the mortgage term. The minimum down payment for this mortgage is 25% and your fixed rate will be a little higher than what you’d find with other home loans.
Fees and Rates
SoFi is relatively unique in that their loans involve no borrower-paid private mortgage insurance. On top of that, there are no origination fees or application fees, regardless of your down payment amount — as long as you meet the minimum 10% threshold.
Rates are competitive and published online. Plus, you can see your own personalized quote early on in the process, even before proceeding with the formal mortgage application.
SoFi’s Mortgage Process
SoFi starts off the process with a quick prequalification. You can get your personalized rate in two minutes by creating an account and inputting some individual information. Plus, it doesn’t affect your credit score. In addition to information about your finances, you can also input how expensive of a house you want to buy and how large a down payment you expect to pay.
From there, you can review your available loan options and terms. If you like what you see, you can get your pre-approval to help with your property offer. Then you move into the official application process. This part is completely digital and SoFi uses a nontraditional underwriting process. You can also talk to a loan officer if you have any questions or need advice.
In addition to looking at your FICO score, SoFi also considers other less tangible factors, such as:
- Professional history
- Earning potential
- Payment history
Another unique feature of the SoFi mortgage process is that you only have to submit your information once. Using that data, SoFi can underwrite your loan in order to strengthen your offer on a home. This is especially important in competitive markets where bidding wars are common.
According to SoFi, most mortgages usually close within 28 days.
SoFi offers a special perk for existing members in the form of a rate discount. If you have another type of loan with SoFi, you can receive a 0.125% discount on your mortgage. Over 15 or 30 years, that can put a lot of extra cash in your pocket.
Additional perks for SoFi mortgage borrowers include career counseling and community events. Whether it’s a local happy hour or networking event, SoFi is committed to helping borrowers stay on track with their careers.
SoFi also offers a mortgage calculator that makes it easy to see how much money you can save on your mortgage with different rates and down payments.
SoFi offers both traditional and sophisticated lending products for borrowers who can demonstrate strong earning potential and future career growth. This can work well for those who don’t have a lot of cash saved for a down payment or have a high debt-to-income ratio, especially if it’s due to student loans.
Check with SoFi to see if your finances warrant using this digital lender for your next home purchase.