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Cash Out Refinance

Cash Out Refinance Texas is a type of refinancing in which you receive a loan against property that you already own. The amount of this loan is higher than the cost of the transaction and any existing liens or expenses. This type of refinancing is typically used by borrowers with good or excellent credit.cash out refinance

Choosing a cash-out refinance requires careful consideration of your future financial situation. For example, you may wish to consider whether your future career prospects will allow you to keep up with large monthly payments. Missing payments can have negative consequences on your credit score and could even cost you your home. You should also carefully consider the value of the lump sum you’ll be receiving from the loan.

The lender may require that you’ve held legal title to your property for six months or more before applying for a cash-out refinance. This is to ensure that your new loan does not exceed your initial investment in the property. Also, you’ll need to make sure that any closing costs, points, and prepaid fees are covered. If you can’t make all of these payments, you may not be eligible for a cash-out refinance after all.

There are other factors that affect the price of a cash-out refinance, including your credit score and the type of loan you’re applying for. Your area also influences the price. While you may think that lenders are more generous in certain states than others, they actually consider national rates when determining prices. Keep in mind that taxes and fees in your area can raise the price of refinancing. It’s also a good idea to stay updated on local housing prices.

A cash-out refinance can be a good option for homeowners who need extra cash for debt consolidation or college tuition. The rates of cash-out refinancing are lower than the interest rates you would pay on unsecured loans. So, if you’re looking for a cash-out refinance, make sure you’ve considered all the costs and savings before signing up.

Although cash-out refinances credit score requirements are lower than those for conventional refinances, it’s still a good idea to have a good credit score. Typically, lenders will accept a credit score of 620 or higher, but some lenders may have stricter guidelines. The lender will also consider your debt-to-income (DTI) ratio, which is a ratio of your debt to your pretax income. According to the Consumer Financial Protection Bureau, this ratio shouldn’t exceed 43 percent. However, some lenders may make exceptions if you have a high credit score or if the refinance will allow you to take advantage of any savings.

Cash-out refinances are a great option if you want to consolidate your debt, pay for college, or invest in other purchases. However, you must make sure you qualify based on your finances, credit, and property. The amount of cash you can get from a cash-out refinance depends on how much equity you have in your home and how much loan-to-value ratio you have.

Another consideration for cash-out refinance is the tax benefit. If you’re borrowing money from your home equity, you’ll be able to deduct the interest from your income if you sell it later. However, if you don’t have 20% equity in your property, you may not qualify for cash-out refinancing.

Cash-out refinancing allows homeowners to borrow money from the equity in their homes. However, it is important to consider the costs of doing so. This loan typically comes with a number of closing costs, which can add anywhere from 2% to 5% of the loan amount. Depending on the lender, you may also need to pay private mortgage insurance, which will increase the borrowing costs.

If you have a low credit score, you can still qualify for a cash-out refinance. However, it will take some discipline to stay on top of payments. You won’t be able to go on a lavish vacation if you don’t pay your bills on time.

If you have delinquent debt on your report, you’ll have a harder time getting a cash-out to refinance. However, it is possible to use your cash-out refinance to pay off any tax liens or judgments that may be on your record. In addition, make sure that you remove any disputed accounts from your credit report before you apply for a cash-out refinance. This is because the credit bureaus often ignore disputed accounts and therefore give you an artificially high score.

Should I Buy or Build a House?

If you’re looking for a place to call your own, the thought of building a home may have popped into your head. Constructing a new home is generally more expensive and takes more time and effort, but it can also ensure you get a home that’s move-in ready and customized to your liking.

Here’s what to consider if you’re deciding whether to buy or build a home:

Is it cheaper to buy or build a house?Pros and cons of building a housePros and cons of buying a houseShould you buy or build a house?

Is it cheaper to buy or build a house?

It’s generally cheaper to buy an existing home compared to a new-construction property, according to the National Association of Home Builders. The average cost of building a new home was $296,652 in 2019, but buying land and budgeting for pandemic-related price increases will drive up that price tag.

When you combine those costs in 2021, the average price of a new single-family home was $477,800 in October, compared to just $377,300 for an existing home.

Of course, the actual cost of each type of home could look different for you depending on location and what you’re looking for.

Cost of buying a house

You probably already know that you need to save for a down payment, closing costs, and cash reserves when getting a mortgage for an existing home — the same as you would with a newly constructed property. But there are some additional costs you’ll likely incur when buying a home:

Type of costEstimated costHomeowners insurance premium$1,478 per year for a 10-year-old homeReal estate agent’s commission5% to 6% of the home’s sales priceOngoing maintenance1% of the home’s value per yearAppliances$1,889Property taxesVaries by location. May be higher on a new-construction home because they’re often valued higher than resale properties. Sources: National Association of Home Builders, RedFin, and The Zebra

Shopping around for a mortgage can be stressful. Fortunately, Credible simplifies this process and makes comparing multiple lenders easy. You can see prequalified rates from our partner lenders and generate a streamlined pre-approval letter in just a few minutes.

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Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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Cost of building a house

There are lots of pieces that go into building a home, and your home designer or builder can help you create a budget. In addition to the costs that come with buying a house, you’ll need to budget for the following building costs:

Type of costEstimated rangeLand and site work$5,000 – $38,000Foundation work$16,600 – $72,000Framing$16,600 – $95,000Exterior work$20,000 – $95,000Major systems$17,000 – $72,000Interior finishes$42,000 – $167,000Source: HomeAdvisor

Pros and cons of building a house

You’ll have to consider whether the chance to build the home of your dreams is worth the trade-offs. Some of the pros and cons of building a house include:

Pros of building a house

Customization: Depending on availability and the builder’s options, you may be able to fully customize your home in the neighborhood of your choice. Maintenance: Because everything is brand new, you likely won’t have to budget for major repairs and maintenance projects until later on. The builder may also cover the home under a builder warranty.Energy costs: Newly built homes come with windows, doors, HVAC systems, and appliances that are designed to keep homes as energy-efficient as possible. Using less energy keeps utility costs down and lowers your carbon footprint. Toxic materials: Some older homes are built with toxic materials such as asbestos, lead paint, and formaldehyde. New builds likely won’t use these materials.Competition: In a seller’s market, a home listing might attract multiple offers. But when you’re building a home, you won’t need to compete with other buyers once you buy the land.

Cons of building a house

Cost: When you factor in the cost of land, building a home is typically more expensive than buying an existing one.Effort: Although you’re not the one picking up the power tools, you may put in a lot of work making decisions as the home is being built.Time: It takes 6.8 months, on average, to build a new single-family property, according to the U.S. Census Bureau. You’ll need to budget for alternative living costs during this time.Contractors: You’ll need to work with the general contractor along with various subcontractors throughout the homebuilding process. That means you could encounter more delays and issues because more people are involved.Landscaping: If your newly built home doesn’t come with landscaping, you’ll need to spend time and money getting the yard you want.

Also See: Construction Loans: What They Are and How They Work

Pros and cons of buying a house

Buying an existing home is the more traditional approach as it typically saves you time and money. Some of the pros and cons of buying a home include:

Pros of buying a house

Convenience: Buying a move-in ready home is a quicker and more convenient process than building a home.Time: Building a home takes almost seven months on average, while the timeline for buying an existing house is much shorter. Cheaper: Nationwide, the cost of buying an existing property is generally lower than building a new home. However, that may change based on where you are and what you’re looking for.Landscaping: Older homes typically come with mature landscaping, so you won’t have to spend time and money on a new lawn and plants. More style options: Homes in older neighborhoods often have a variety of architecture styles and floor plans, and they may come with a certain antique charm.

Cons of buying a house

Competition: The average home listing received four offers in early 2021. In a competitive market with low inventory, you’ll need to make your offer stand out when buying a home.Ongoing repairs: The cost of ongoing repairs varies with each home, but professionals say it typically comes out to 1% of the home’s value per year. So a $200,000 home may cost $2,000 per year to maintain. Not as energy-efficient: An older home may come with older appliances and internal systems, so you’ll either pay higher utility bills or pay to replace these features.You may get less for your money: Existing homes are generally smaller than new construction, which means they may cost more per square foot. May contain toxic materials: Some older homes were built with hazardous materials such as lead and asbestos, which could put your family at risk. If you’re buying a resale home, it’s a good idea to test for these materials during the home inspection.

Don’t Miss: How to Buy a House: Step-by-Step Guide

Should you buy or build a house?

Because resale homes are generally cheaper and more convenient to move into, you might want to start your home search with existing properties. You can target desirable neighborhoods and spend a few weeks checking out the inventory there. These homes may not be in perfect condition or have exactly what you want — so plan on budgeting for renovations, new appliances, and ongoing repairs — but you might be willing to compromise if the price is right.

If you haven’t found what you’re looking for, then a new-construction home might be a good bet. Check out the costs of building in your area and the price of available land. Building a new home is usually more expensive, but there’s a reason for it. New homes come with new appliances, less maintenance, and better energy-saving measures, and they’re typically larger than what you’d find on an older home.

Check Out: How to Know If You Should Buy a House

The post Should I Buy or Build a House? appeared first on Credible.

What Is a Vendor Take-Back Mortgage and How Does It Work?

A vendor take-back mortgage can help homeowners and real estate investors sell properties that aren’t moving in a tough market. They can also help buyers finance homes in a tight lending environment, or in a lending market that can’t accommodate their finances.

This type of mortgage can offer flexible solutions to challenging homebuying scenarios. However, it can also pose major risks for both buyers and sellers.

Here’s what you need to know about vendor take-back mortgages:

What is a vendor take-back mortgage?How vendor take-back mortgages workBenefits and risks of a vendor take-back mortgageVendor take-back mortgage vs. traditional mortgageExample of a vendor take-back mortgageWhen to consider a vendor take-back mortgage

What is a vendor take-back mortgage?

A vendor take-back (VTB) mortgage is a loan from a property seller to a property buyer. It can cover all or part of the purchase price.

Vendor take-back mortgages aren’t a popular way for individuals to buy and sell a primary residence. More often they’re used by real estate investors.

A vendor take-back mortgage is considered a type of creative financing, or an alternative to traditional financing. Whether you’re considering this option as a buyer or seller, proceed with caution.

What else is a VTB mortgage called? There are a wide variety of terms used to describe a vendor take-back mortgage, such as:

Seller financingSeller take-back mortgageSeller carry-back mortgageCarry-back financingOwner financing

How vendor take-back mortgages work

A vendor take-back mortgage functions much like a traditional mortgage, only there’s no lender serving as the middleman. The seller will act as a lender and have a lien on the home, and the buyer will make monthly payments to the seller. Like a traditional mortgage, the home serves as collateral for the take-back loan.

Here’s what to expect if you’re using a vendor take-back mortgage to buy or sell a home:

If you’re buying a home using seller financing: The seller will become your mortgage lender. They might be your only lender, or you might also finance part of the purchase price through another source, such as a bank. You’ll need to sign a promissory note legally agreeing to the deal’s terms. A buyer might consider a take-back home loan if they have poor credit, a lot of debt, or some other factor preventing them from qualifying for a mortgage.If you’re selling a home using seller financing: You’ll become the buyer’s mortgage lender. You’ll need to own your home free and clear before you can consider this option. Depending on the buyer’s needs, you might lend the entire purchase price or just part of it. A seller might consider this type of financing in a strong buyer’s market.

What are typical terms of a VTB mortgage?

If a vendor take-back mortgage will be the only financing, the buyer and seller have a lot of flexibility in structuring the deal.

Sellers will typically ask for a higher interest rate since they’re taking on risk by serving as the lender of the loan. But, the type of loan and length of the loan term can vary depending on the buyer’s needs.

Overall, there’s a lot of room for negotiating terms and closing costs, which is what makes vendor take-back mortgages enticing for both buyers and sellers.

Tip: While vendor take-back mortgages offer a great deal of flexibility for both parties, as the seller, you’ll still need to comply with state and federal mortgage lending laws.

Under federal law, that includes charging a fixed interest rate (or an adjustable rate that adjusts after five years) and making a good faith determination that the buyer can pay back the loan.

State law may require several pages of disclosures in a vendor financing agreement. And usury laws may cap how much interest you can charge as the seller, depending on how your state categorizes the transaction.

Be sure to hire an experienced lawyer to help you through the legal aspects of the transaction.

Benefits and risks of a vendor take-back mortgage

Whether you’re the buyer or the seller in a vendor take-back deal, you’ll want to understand the benefits and risks before signing any paperwork.

Benefits for buyers

As a buyer, you might be interested in a seller take-back mortgage because of these potential benefits:

More financing opportunities: If you’ve shopped around extensively and can’t find a lender that’ll give you a mortgage, seller financing might allow you to fund the purchase. Fewer closing costs: With seller financing, you shouldn’t have to pay for an origination fee or mortgage insurance premiums. Other closing costs, like a home appraisal and title search are up to your discretion (though, they’re generally encouraged to help protect your investment).Customized financing terms: You’ll still have to follow state and federal laws, but you won’t have to follow rules established by entities like Fannie Mae and the Federal Housing Administration. This leaves more room for negotiating the terms of your loan, and you might wind up with more favorable terms as a result.

Risks for buyers

However, you should also be wary of some serious potential drawbacks:

Higher interest rates: If you can’t get a traditional mortgage because lenders think your financial profile is too risky, an individual seller will likely feel the same way. If they do agree to a vendor take-back mortgage, they may charge a high interest rate to compensate them for the risk.Potential for mortgage fraud: A seller who doesn’t have the right (or intention) to give you a legal interest in the property might take your monthly payments under the guise of offering seller financing. You might think you’ve purchased a home when you’re really just renting it. And, if the property is already mortgaged and the borrower doesn’t pay, you could get evicted.Foregoing traditional protections: If you’re not experienced in buying and selling real estate, you could easily overpay for the home or buy a property with title defects that threaten your ownership rights. This is why most lenders require a home appraisal and title search.

Read: How to Get a Mortgage with a 600 Credit Score

Benefits for sellers

If you’re selling a home, here’s what might entice you to offer seller financing to a homebuyer:

Extra income on interest: Becoming a private lender might appeal to you if the price is right as it could end up netting you a higher return than your other interest-bearing investments. Of course, you’ll still need to pay tax on the interest income.Better chance at closing: In a buyer’s market where you haven’t been able to sell your home, a vendor take-back mortgage might help make the transaction possible and allow you to get closer to your asking price when other buyers have made lower offers. And since you’ll avoid lender processing times and other steps in the underwriting process, you may be able to close the deal faster.Tax breaks: If you’re eligible, you might not owe tax on the first $250,000 in profit from selling your home; that exemption doubles if you’re married. Using a vendor take-back mortgage might also allow you to treat the sale as an installment sale and pay less tax by receiving the proceeds over several years.

Risks for sellers

As a seller, you’ll also face certain risks if you offer seller financing to homebuyers:

Not getting all of the cash upfront: If you’re selling your home, you probably want to use the proceeds to buy a different home, increase your savings, or put toward some other expense. Providing seller financing means getting paid over time instead.Additional risk: If the borrower stops paying and you’re the sole lender, you may have to pursue costly and time-consuming foreclosure proceedings. If you provide secondary financing, you’re still likely to come up empty-handed since you hold the second lien. The primary lender will hold the first lien and will get paid first from foreclosing and selling the home.Unqualified or fraudulent buyers: There’s a good chance you don’t have the know-how or relationships to check a buyer’s creditworthiness with the thoroughness and accuracy that traditional mortgage lenders can. The buyer may not have the capacity or willingness to repay the loan.Important: Because vendor take-back mortgages are complex transactions, these are just a few of the potential benefits and risks. If you’re seriously considering this type of financing, whether as a buyer or seller, it would be wise to speak with a real estate attorney.

Vendor take-back mortgage vs. traditional mortgage

There are some key differences between vendor take-back mortgages and traditional mortgages:

VTB mortgageTraditional mortgageLenderHome sellerIncludes banks, mortgage lenders, and credit unionsInterest rateGenerally higher than traditional mortgage ratesVaries depending on a number of factors, including market conditions, loan size, and your credit scoreClosing costsUp to the two parties, but usually lower than what you would pay with a traditional lenderTypically 2% to 5% of the loan amountLoan termsMust have a fixed rate or an adjustable interest rate with no adjustment in the first five years; other terms, such as the term length, are negotiableVaries by lender (many lenders offer fixed-rate and adjustable-rate loans with terms between 10 to 30 years)QualificationsWhatever the seller will accept, subject to state and federal lawsVaries by loan type and lender (often a credit score of at least 620, a down payment of at least 3%, and a DTI of 50% or less)Mortgage insuranceNoneOften required with less than 20% down

Example of a vendor take-back mortgage

A vendor take-back mortgage can provide all or part of the financing a buyer needs. Here’s how those two options might work.

Partially funded VTB mortgage example

Let’s say you’re selling your house for $800,000, but no one has offered close to your asking price — and you’re not willing to sell for less.

A buyer’s agent suggests that you accept an offer in which the buyer makes a down payment of $50,000, gets a first mortgage for $650,000, and you finance the remaining $100,000 as a second mortgage (the VTB mortgage).

At closing, you would get $700,000 (the down payment plus the first mortgage). Over the next five years — or whatever terms you agreed to with the buyer — you would get the remaining $100,000.

Fully funded VTB mortgage example

Perhaps you’re in the market to buy a home, but can’t get pre-approved for a mortgage. But your agent convinces an investor who owns many homes to sell one to you and provide all of the financing.

The seller agrees, as long as you agree to an interest rate of 8% and pay off the loan in 10 years. The seller would hold the first and only mortgage against the home in the form of a VTB mortgage.

When to consider a vendor take-back mortgage

Vendor take-back mortgages come with significant risk for both the buyer and seller. They also require a level of financial sophistication that many individuals don’t have.

Here are the types of people who should and shouldn’t consider a vendor take-back mortgage:

Who a VTB mortgage is best suited for: A wealthy real estate investor or someone with a higher risk tolerance and experience with real estate transactions.Who a VTB mortgage is not suited for: Anyone whose retirement nest egg or personal savings is largely tied up in their home equity. Same goes for anyone unfamiliar with real estate laws and transactions. If any of this applies to you, and you lack the resources to hire a real estate attorney, you should probably avoid seller financing.

Keep Reading: 13 Tips for First-Time Homebuyers: Your Must-Know Advice

The post What Is a Vendor Take-Back Mortgage and How Does It Work? appeared first on Credible.

Tiny Home Financing: What Are My Loan Options?

A tiny home generally refers to a home that’s 500 square feet or less. Because these structures are much smaller than traditional homes, buying one could be much more affordable in comparison.

Tiny homes cost $45,000 on average — but if you get one with few amenities, it could set you back as little as $8,000, according to HomeAdvisor. Additionally, there are several options that could help you finance a tiny home purchase, such as taking out a personal loan.

If you’re thinking about using a personal loan for tiny home financing, here’s what you should know:

Tiny home loan typesFinancing a tiny home: additional considerations

Tiny home loan types

If you’re looking to finance a tiny home, you likely won’t be able to use a traditional mortgage. While mortgage lenders don’t often disclose their minimum loan amounts, mortgages typically aren’t offered under $60,000 — meaning a tiny home purchase probably won’t qualify.

The good news is that there are several options available that could help you finance a tiny home purchase, including:

Personal loans

A personal loan is a type of installment loan that can be used for almost any personal expense, such as a tiny home. These loans are offered by a few types of lenders, including online lenders, banks, and credit unions.

You can typically borrow $600 to $100,000 with a personal loan and will have one to seven years to repay it, depending on the lender. Additionally, most personal loans are unsecured — meaning you don’t have to worry about collateral.

Tip: You’ll generally need good to excellent credit to qualify for a personal loan — a good credit score is usually considered to be 700 or higher. There are also several lenders that provide personal loans for bad credit, but these loans tend to come with higher interest rates compared to good credit loans.

If you have poor credit and are struggling to get approved, consider applying with a creditworthy cosigner to improve your chances. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.

If you decide to take out a personal loan, be sure to consider as many lenders as possible. This way, you can find the right loan for your needs.

Credible makes this easy: You can compare your prequalified rates from our partner lenders in the table below in just two minutes — without affecting your credit.

LenderFixed ratesLoan amountsLoan terms (years)Time to fund

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


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9.95% – 35.99% APR$2,000 to $35,0002, 3, 4, 5*As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)Fixed APR:
9.95% – 35.99% APRVariable APR:
N/AMin. credit score:
550Loan amount:
$2,000 to $35,000**Loan terms (years):
2, 3, 4, 5*Time to fund:
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)Fees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except CO, IA, HI, VT, NV NY, WVCustomer service:
Phone, emailSoft credit check:
YesLoan servicer:
AvantLoan Uses:
Debt consolidation, emergency expense, life event, home improvement, and other purposesMin. Income:
$1,200 monthly

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.79% – 17.99% APR$10,000 to $50,0003, 4, 5, 6Next business dayFixed APR:
6.79% – 17.99% APRVariable APR:
N/AMin. credit score:
700Loan amount:
$10,000 to $50,000Loan terms (years):
3 to 6Time to fund:
Next business dayFees:
No prepayment penaltyDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Debt consolidation, home improvement, self-employment, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.99% – 35.99% APR$5,000 to $35,0002, 3, 4, 5As soon as 1 – 3 business days after successful verificationFixed APR:
4.99% – 35.99% APRVariable APR:
N/AMin. credit score:
600Loan amount:
$2,000 to $50,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as 1 – 3 business days after successful verificationFees:
Origination feeDiscounts:
NoneEligibility:
Available in all states except DC, IA, VT, and WVCustomer service:
PhoneSoft credit check:
YesLoan servicer:
Best Egg and Blue Ridge BankMin. Income:
NoneLoan Uses:
Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.99% – 24.99% APR$2,500 to $35,0003, 4, 5, 6, 7As soon as the next business day after acceptanceFixed APR:
5.99% – 24.99% APRMin. credit score:
660Loan amount:
$2,500 to $35,000Loan terms (years):
3, 4, 5, 6, 7Time to fund:
As soon as the next business day after acceptanceFees:
Late feeDiscounts:
NoneEligibility:
 Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesLoan Uses:
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
7.99% – 29.99% APR$10,000 to $50,0002, 3, 4, 5As soon as 2 business daysFixed APR:
7.99% – 29.99% APRMin. credit score:
Does not discloseLoan amount:
$10,000 to $50,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as 2 business daysFees:
Origination feeDiscounts:
NoEligibility:
Available in all states except CO, CT, HI, KS, NH, NY, ND, OR, VT, WV, WI, and WYCustomer service:
PhoneSoft credit check:
YesMin. Income:
NoneLoan Uses:
Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
7.04% – 35.89% APR$1,000 to $40,0003, 5Usually takes about 2 daysFixed APR:
7.04% – 35.89% APRMin. credit score:
600Loan amount:
$1,000 to $40,000Loan terms (years):
3, 5Time to fund:
Usually takes about 2 daysFees:
Origination feeDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
Phone, emailSoft credit check:
YesLoan servicer:
LendingClub BankMin. Income:
NoneLoan Uses:
Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
9.99% – 35.99% APR$2,000 to $36,5002, 3, 4As soon as the next business dayFixed APR:
9.99% – 35.99% APRMin. credit score:
580Loan amount:
$2,000 to $36,500Loan terms (years):
2, 3, 4Time to fund:
As soon as the next business dayFees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except NV and WVCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
$20,000Loan Uses:
Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.49% – 19.99% APR$5,000 to $100,0002, 3, 4, 5, 6, 7
(up to 12 years for home improvement loans)As soon as the same business dayFixed APR:
2.49% – 19.99% APRMin. credit score:
660Loan amount:
$5,000 to $100,000Loan terms (years):
2, 3, 4, 5, 6, 7*Time to fund:
As soon as the same business dayFees:
NoneDiscounts:
AutopayEligibility:
Available in all states except RI and VTCustomer service:
Phone, emailSoft credit check:
NoLoan servicer:
LightStreamMin. Income:
Does not discloseLoan Uses:
Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.99% – 19.99% APR1$3,500 to $40,00023, 4, 5, 6, 7Many Marcus customers receive funds in as little as three daysFixed APR:
6.99% – 19.99% APR1Min. credit score:
660
(TransUnion FICO®️ Score 9)Loan amount:
$3,500 to $40,0002Loan terms (years):
3, 4, 5, 6Time to fund:
Many Marcus customers receive funds in as little as three daysFees:
NoneDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesLoan servicer:
Goldman SachsMin. Income:
$30,000Loan Uses:
Credit card refinancing, debt consolidation, home improvement, major purchase, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
18.0% – 35.99% APR$1,500 to $20,0002, 3, 4, 5As soon as the same day, but usually requires a visit to a branch officeFixed APR:
18.0% – 35.99% APRMin. credit score:
NoneLoan amount:
$1,500 to $20,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as the same day, but usually requires a visit to a branch officeFees:
Origination feeDiscounts:
NoneEligibility:
Must have photo I.D. issued by U.S. federal, state or local governmentCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
Does not disclose

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.99% – 17.99% APR$600 to $50,000
(depending on loan term)1, 2, 3, 4, 52 to 4 business days after verificationFixed APR:
4.99% – 17.99% APRMin. credit score:
660Loan amount:
$600 to $50,000*Loan terms (years):
1, 2, 3, 4, 5Time to fund:
2 to 4 business days after verificationFees:
NoneDiscounts:
NoneEligibility:
Does not discloseCustomer service:
Phone, emailSoft credit check:
NoMin. Income:
Does not discloseLoan Uses:
Debt consolidation, home improvement, transportation, medical, dental, life events

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.95% – 35.99% APR$2,000 to $40,0003, 5As soon as one business dayFixed APR:
6.95% – 35.99% APRMin. credit score:
640Loan amount:
$2,000 to $40,000Loan terms (years):
3, 5Time to fund:
As soon as one business dayFees:
Origination feeDiscounts:
NoneEligibility:
Available in all states except IA, ND, WVCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
NoneLoan Uses:
Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.74% – 19.28% APR10$5,000 to $100,0002, 3, 4, 5, 6, 73 business daysFixed APR:
4.74% – 19.28% APR10Min. credit score:
Does not discloseLoan amount:
$5,000 to $100,000Loan terms (years):
2, 3, 4, 5, 6, 7Time to fund:
3 business daysFees:
NoneDiscounts:
AutopayEligibility:
Available in all states except MSCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Solely for personal, family, or household uses

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
8.93% – 35.93% APR7$1,000 to $50,0003 to 5 years 8Within one day, once approved9Fixed APR:
8.93% – 35.93% APR7Min. credit score:
560Loan amount:
$1,000 to $50,000Loan terms:
3 to 5 years 8Time to fund:
Within one day, once approved9Loan types:
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchasesFees:
Origination feeDiscounts:
AutopayEligibility:
A U.S. citizen or permanent resident; not available in DC, SC, WVCustomer service:
Phone, emailSoft credit check:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.94% – 35.97% APR$1,000 to $50,0002, 3, 5, 6Within a day of clearing necessary verificationsFixed APR:
5.94% – 35.97% APRMin. credit score:
560Loan amount:
$1,000 to $50,000*Loan terms (years):
2, 3, 5, 6Time to fund:
Within a day of clearing necessary verificationsFees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except West VirginiaCustomer service:
EmailSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Debt consolidation, credit card refinancing, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.37% – 35.99% APR4$1,000 to $50,00053 to 5 years4As fast as 1 business day6Fixed APR:
4.37% – 35.99% APR4Min. credit score:
580Loan amount:
$1,000 to $50,0005Loan terms (years):
3 to 5 years4Time to fund:
As fast as 1 business day6Fees:
Origination feeDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
$12,000Loan Uses:
Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposesCompare rates from these lenders without affecting your credit score. 100% free!

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All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | 10SoFi Disclosures | Read more about Rates and Terms

Builder financing

Some tiny home builders offer their own financing programs, often in partnership with a third-party financial institution.

Interest rates and terms can vary widely with these options, so be sure to read the fine print carefully and ask any questions you might have to make sure you fully understand what you’re agreeing to.

Keep in mind: Some builders might require a down payment to secure financing — this could range anywhere from 10% to 20%, depending on the lender.

Learn More: Best Personal Loan Companies

Home equity loan or HELOC

If you already own a home, you might be able to tap into your home’s equity with a home equity loan or home equity line of credit (HELOC). With these options, you might be able to access 75% to 85% of your home’s equity, depending on the lender and the value of your home.

Here’s how they work:

Home equity loanLike personal loans, home equity loans are installment loans that typically come with fixed rates. Because a home equity loan is secured by your home, you’ll likely get a lower rate than you’d get on a personal loan. However, this also means you risk losing your home if you can’t make your payments.HELOCUnlike a home equity loan, a HELOC gives you access to a revolving credit line that you can repeatedly draw on and payoff — similar to a credit card. HELOCs also tend to come with variable rates, which means your rate could fluctuate with market conditions. Also remember that because your home acts as collateral for a HELOC, you risk foreclosure if you don’t keep up with your payments.How do I calculate my home’s equity? To calculate the equity in your home, you’ll subtract your current mortgage balance from your home’s current market or appraised value.

For example, if your home is worth $400,000 and you owe $300,000, then your home’s equity is $100,000.

Check Out: Personal Loan Requirements

Financing a tiny home: additional considerations

While the cost of a tiny home could be low, here are a few additional considerations to keep in mind:

Will you have to buy land?

You’ll need a place to build your home if you want a permanent structure — which means you’ll need to also purchase land. Depending on the location, this could end up being much more expensive than the actual house.

Keep in mind: If you’re thinking about buying raw, undeveloped land, then you’ll have to account for preparing the land for construction as well as getting it hooked up with water, power, and other amenities.

You’ll also need to consider local building codes and how much it will cost to make sure your dwelling is up to code. For example, some areas require that sleeping lofts in tiny homes have an automatic sprinkler system, which is another extra cost to budget for.

How will you pay for home maintenance?

Like any other home, tiny homes also come with maintenance costs. For example, you might need to service your plumbing, appliances, and other home systems. Plus, if your tiny home is on wheels, you might need to purchase and maintain a truck to haul it.

Learn More: Personal Loan Calculator: See Your Payments On a Loan

Will the home be on wheels?

If you’re planning to build or purchase a tiny home on wheels, you might be eligible for a recreational vehicle (RV) loan. Many of these loans use the RV (or tiny home) as collateral, which means you might get a lower rate compared to a standard unsecured loan.

Keep in mind: There are also lenders that offer unsecured RV loans — for example, Credible’s partner lender LightStream offers RV loans from $5,000 to $100,000 and doesn’t require collateral.

If you decide to take out a personal loan for a tiny home, remember to consider as many lenders as you can to find the right loan for your situation.

This is easy with Credible — you can compare your prequalified rates from multiple lenders in two minutes.

Ready to find your personal loan?
Credible makes it easy to find the right loan for you.

Free to use, no hidden feesOne simple form, easy to fill out and your info is protectedMore options, pick the loan option that best fits your personal needsHere for you. Our team is here to help you reach your financial goalsFind My Rate
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The post Tiny Home Financing: What Are My Loan Options? appeared first on Credible.

Can I get a Personal Loan to Buy Land?

Buying land can sometimes be a great investment — for example, you could purchase land to use for building a home or commercial property. There are also several potential ways to pay for it, such as taking out a personal loan, land loan, or construction loan.

If you’re thinking about getting a personal loan to buy land, here’s what you should know:

Personal loans vs. land loans vs. construction loansTaking out a personal loan to buy landPersonal loan eligibility requirementsLand financing alternatives

Personal loans vs. land loans vs. construction loans

There are a few types of loans that can be used to purchase land, including:

Personal loans: Disbursed as a lump sum that can be used how you wishLand loans: Designed for borrowers who want to purchase land but don’t want to build on it immediatelyConstruction loans: Available to potential homeowners who want to purchase land and immediately build a house on it

Here are several important points to consider as you compare your options:

Personal loansLand loansConstruction loansUseAlmost any personal expenses (some lenders might have limitations)For land purchase without immediate construction plansFor land purchase and immediate constructionInterest rate typeFixedFixedVariableInterest ratesFixed rates:
2.49%+
(with Credible partner lenders)Fixed rates: 4% to 5% APRVariable rates: 5% to 10% APRDown paymentNone20% to 50%
(depending on the lender)10% to 20%
(depending on the lender)Repayment terms1 to 7 years
(depending on the lender)2 to 5 years
(depending on loan type)12 to 18 monthsLoan amounts$600 to $100,000
(depending on the lender)Depends on land value, down payment amount, and lender maximumsNo specific maximum

Personal loans

Personal loans are installment loans that can be used to cover almost any personal expense. You can typically borrow $600 to $100,000 or more and have one to seven years to repay a personal loan, depending on the lender.

Keep in mind: Most personal loans are unsecured, which means you don’t have to worry about collateral. However, because these loans are riskier for lenders, you’ll generally need good to excellent credit to qualify.

If you decide to take out a personal loan to buy land, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our partner lenders in the table below in two minutes.

LenderFixed ratesMin. credit scoreMax. loan amounts

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
9.95% – 35.99% APR550$35,000Fixed APR:
9.95% – 35.99% APRVariable APR:
N/AMin. credit score:
550Loan amount:
$2,000 to $35,000**Loan terms (years):
2, 3, 4, 5*Time to fund:
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)Fees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except CO, IA, HI, VT, NV NY, WVCustomer service:
Phone, emailSoft credit check:
YesLoan servicer:
AvantLoan Uses:
Debt consolidation, emergency expense, life event, home improvement, and other purposesMin. Income:
$1,200 monthly

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.79% – 17.99% APR700$50,000Fixed APR:
6.79% – 17.99% APRVariable APR:
N/AMin. credit score:
700Loan amount:
$10,000 to $50,000Loan terms (years):
3 to 6Time to fund:
Next business dayFees:
No prepayment penaltyDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Debt consolidation, home improvement, self-employment, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.99% – 35.99% APR600$35,000Fixed APR:
4.99% – 35.99% APRVariable APR:
N/AMin. credit score:
600Loan amount:
$2,000 to $50,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as 1 – 3 business days after successful verificationFees:
Origination feeDiscounts:
NoneEligibility:
Available in all states except DC, IA, VT, and WVCustomer service:
PhoneSoft credit check:
YesLoan servicer:
Best Egg and Blue Ridge BankMin. Income:
NoneLoan Uses:
Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.99% – 24.99% APR660$35,000Fixed APR:
5.99% – 24.99% APRMin. credit score:
660Loan amount:
$2,500 to $35,000Loan terms (years):
3, 4, 5, 6, 7Time to fund:
As soon as the next business day after acceptanceFees:
Late feeDiscounts:
NoneEligibility:
 Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesLoan Uses:
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
7.99% – 29.99% APRNot disclosed by lender$50,000Fixed APR:
7.99% – 29.99% APRMin. credit score:
Does not discloseLoan amount:
$10,000 to $50,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as 2 business daysFees:
Origination feeDiscounts:
NoEligibility:
Available in all states except CO, CT, HI, KS, NH, NY, ND, OR, VT, WV, WI, and WYCustomer service:
PhoneSoft credit check:
YesMin. Income:
NoneLoan Uses:
Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
7.04% – 35.89% APR600$40,000Fixed APR:
7.04% – 35.89% APRMin. credit score:
600Loan amount:
$1,000 to $40,000Loan terms (years):
3, 5Time to fund:
Usually takes about 2 daysFees:
Origination feeDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
Phone, emailSoft credit check:
YesLoan servicer:
LendingClub BankMin. Income:
NoneLoan Uses:
Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
9.99% – 35.99% APR580$36,500Fixed APR:
9.99% – 35.99% APRMin. credit score:
580Loan amount:
$2,000 to $36,500Loan terms (years):
2, 3, 4Time to fund:
As soon as the next business dayFees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except NV and WVCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
$20,000Loan Uses:
Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.49% – 19.99% APR660$100,000Fixed APR:
2.49% – 19.99% APRMin. credit score:
660Loan amount:
$5,000 to $100,000Loan terms (years):
2, 3, 4, 5, 6, 7*Time to fund:
As soon as the same business dayFees:
NoneDiscounts:
AutopayEligibility:
Available in all states except RI and VTCustomer service:
Phone, emailSoft credit check:
NoLoan servicer:
LightStreamMin. Income:
Does not discloseLoan Uses:
Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.99% – 19.99% APR1660
(TransUnion FICO®️ Score 9)$40,000Fixed APR:
6.99% – 19.99% APR1Min. credit score:
660
(TransUnion FICO®️ Score 9)Loan amount:
$3,500 to $40,0002Loan terms (years):
3, 4, 5, 6Time to fund:
Many Marcus customers receive funds in as little as three daysFees:
NoneDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesLoan servicer:
Goldman SachsMin. Income:
$30,000Loan Uses:
Credit card refinancing, debt consolidation, home improvement, major purchase, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
18.0% – 35.99% APRNone$20,000Fixed APR:
18.0% – 35.99% APRMin. credit score:
NoneLoan amount:
$1,500 to $20,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as the same day, but usually requires a visit to a branch officeFees:
Origination feeDiscounts:
NoneEligibility:
Must have photo I.D. issued by U.S. federal, state or local governmentCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
Does not disclose

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.99% – 17.99% APR660$50,000
(depending on loan term)Fixed APR:
5.99% – 17.99% APRMin. credit score:
660Loan amount:
$600 to $50,000*Loan terms (years):
1, 2, 3, 4, 5Time to fund:
2 to 4 business days after verificationFees:
NoneDiscounts:
NoneEligibility:
Does not discloseCustomer service:
Phone, emailSoft credit check:
NoMin. Income:
Does not discloseLoan Uses:
Debt consolidation, home improvement, transportation, medical, dental, life events

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.95% – 35.99% APR640$40,000Fixed APR:
6.95% – 35.99% APRMin. credit score:
640Loan amount:
$2,000 to $40,000Loan terms (years):
3, 5Time to fund:
As soon as one business dayFees:
Origination feeDiscounts:
NoneEligibility:
Available in all states except IA, ND, WVCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
NoneLoan Uses:
Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.74% – 19.28% APR10Does not disclose$100,000Fixed APR:
4.74% – 19.28% APR10Min. credit score:
Does not discloseLoan amount:
$5,000 to $100,000Loan terms (years):
2, 3, 4, 5, 6, 7Time to fund:
3 business daysFees:
NoneDiscounts:
AutopayEligibility:
Available in all states except MSCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Solely for personal, family, or household uses

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
8.93% – 35.93% APR7560$50,000Fixed APR:
8.93% – 35.93% APR7Min. credit score:
560Loan amount:
$1,000 to $50,000Loan terms:
3 to 5 years 8Time to fund:
Within one day, once approved9Loan types:
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchasesFees:
Origination feeDiscounts:
AutopayEligibility:
A U.S. citizen or permanent resident; not available in DC, SC, WVCustomer service:
Phone, emailSoft credit check:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.94% – 35.97% APR560$50,000Fixed APR:
5.94% – 35.97% APRMin. credit score:
560Loan amount:
$1,000 to $50,000*Loan terms (years):
2, 3, 5, 6Time to fund:
Within a day of clearing necessary verificationsFees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except West VirginiaCustomer service:
EmailSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Debt consolidation, credit card refinancing, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.37% – 35.99% APR4580$50,000Fixed APR:
4.37% – 35.99% APR4Min. credit score:
580Loan amount:
$1,000 to $50,0005Loan terms (years):
3 to 5 years4Time to fund:
As fast as 1 business day6Fees:
Origination feeDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
$12,000Loan Uses:
Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposesCompare rates from these lenders without affecting your credit score. 100% free!

Compare Now

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All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | 10SoFi Disclosures | Read more about Rates and Terms

Land loans

Land loans are specifically designed for borrowers who are purchasing land but don’t have immediate plans to build on it. There are three main types of land purchases, each of which has its own kind of land loan. These include:

Raw land: This is land that hasn’t been developed and has no connection to the electrical grid, sewers, or roads. This kind of land can be less expensive, but the loans typically require a higher down payment (often 20% or more) and come with higher interest rates. If you’re interested in a raw land loan, be prepared to provide the lender with extensive documentation of your plans to develop the land.Unimproved land: This kind of land is somewhat more developed than raw land and usually has some amenities and connections to utilities. However, it generally won’t have an electric meter, natural gas meter, or phone box. Because unimproved land loans are less risky to the lender than raw land loans, they tend to have lower interest rates. However, you’ll still likely need to come up with a down payment of 20% or more as well as have a detailed plan for development.Improved land: This type of land is already set up with access to utilities, roads, sewers, and other major amenities, which makes it less of a risk to the lender. But keep in mind that this also makes it more expensive than raw or unimproved land. An improved land loan will typically come with a lower interest rate and require less of a down payment than other types of land loans. On the other hand, rates on these loans are much higher than you’d pay on a traditional mortgage.

Land loans typically come with an initial repayment term of two to five years followed by a balloon payment at the end of the term. There are also some lenders that might offer longer terms if you plan to build a home on the land.

Keep in mind: Because land loans are considered riskier than traditional mortgage loans, they can come with more stringent requirements and higher interest rates.

This means you’ll likely need to have excellent credit, a complete plan for the development of the land, and a substantial down payment.

Learn More: How to Get a Personal Loan

Construction loans

A construction loan is used to purchase land, then fund the construction costs of building a new home or structure. The repayment term for a construction loan usually is only as long as the construction itself — usually 12 to 18 months. After the construction is finished, the loan will convert to a traditional 15- or 30-year mortgage.

Keep in mind: Though construction loans are less risky than land loans, they’re still more expensive than traditional mortgage loans. You’ll generally need good to excellent credit, a 20% down payment, and a detailed plan for the construction, including schedule and budget projections.

Also note that construction loans generally have variable rates, which means your rate could fluctuate according to market conditions.

Check Out: Personal Loan Calculator: See Your Payments On a Loan

Taking out a personal loan to buy land

While using a personal loan to buy land could be a good idea in some cases, it isn’t right for everyone. Here are some pros and cons to consider as you weigh your options:

Benefits of using a personal loan for land purchase

Fixed rates: Personal loans have fixed interest rates, which means your payments will stay the same throughout the life of your loan.Might be less expensive: A personal loan could be less expensive compared to a land or construction loan since you don’t have to worry about a down payment. Fewer requirements: Unlike with land and construction loans, you don’t have to provide a detailed land development plan to take out a personal loan.

Disadvantages of personal loans for land purchase

Fewer options for bad credit: You’ll typically need good to excellent credit to get approved for a personal loan — which means it could be hard to qualify if you have poor or fair credit.Smaller loan amounts: You can generally borrow $600 to $100,000 with a personal loan, which might not be enough to cover your expenses.Higher interest rates: Personal loans can come with higher interest rates compared to other funding options, such as traditional mortgages or home equity loans.

Learn More: Best Personal Loan Companies

Personal loan eligibility requirements

While eligibility criteria for personal loans can vary by lender, there are a few common requirements that you’ll likely come across, including:

Good credit: You’ll generally need good to excellent credit to qualify for a personal loan — a good credit score is usually considered to be 700 or higher. There are also several lenders that offer personal loans for bad credit, but these loans tend to come with higher interest rates compared to good credit loans.Verifiable income: Some lenders have a minimum income requirement while others don’t. But in either case, you’ll likely need to provide proof of income so the lender can see that you can afford to repay the loan.Low debt-to-income ratio: Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments compared to your income. To get a personal loan, your DTI ratio should be no higher than 40% — though some lenders might require lower ratios than this.

Check Out: Personal Loan Requirements

Land financing alternatives

There are also several other potential ways to finance a land purchase. If a personal loan, land loan, or construction loan don’t seem right for you, here are a few alternatives to consider:

Section 523 loans: These U.S. Department of Agriculture (USDA) loans can be applied for by nonprofit organizations to buy housing sites for low- and moderate-income families. Houses on these sites must then be constructed by the Self-Help method — meaning families will help build each other’s homes.Section 524 loans: These USDA loans are similar to Section 523 loans but don’t have any restrictions when it comes to construction method.Home equity loan: If you’re a homeowner, you might be able to tap into your home’s equity with a home equity loan. Like personal loans, home equity loans are paid out as a lump sum that you can use how you wish. They also tend to have lower interest rates than personal loans. However, if you can’t keep up with your payments, you risk losing your home. HELOC: A home equity line of credit (HELOC) could be another way for homeowners to utilize the equity in their homes. Unlike a home equity loan, a HELOC is a type of revolving credit that you can repeatedly draw on and pay off — similar to a credit card. Just remember that because your home secures the loan, you risk losing it if you can’t make your payments.

If you decide to take out a personal loan to buy land, remember to shop around and consider as many lenders as you can to find the right loan for your needs. This is easy with Credible: You can compare your prequalified rates from multiple lenders in two minutes — without affecting your credit.

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Credible makes it easy to find the right loan for you.

Free to use, no hidden feesOne simple form, easy to fill out and your info is protectedMore options, pick the loan option that best fits your personal needsHere for you. Our team is here to help you reach your financial goalsFind My Rate
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The post Can I get a Personal Loan to Buy Land? appeared first on Credible.

Should I Take Out a Personal Loan to Start a Business?

While the U.S. Small Business Administration (SBA) offers SBA loans to new and established small business owners, these loans require the borrower to submit a business plan and often take some time to process — which can mean they’re out of reach for entrepreneurs who need quick access to cash for their ventures.

However, you might be able to get the startup funding you need through a personal loan. Although some lenders prohibit their loans from being used for business expenses, there are others that will let you use the funds to buy inventory, pay for marketing, or cover other business-related costs.

Here’s what you need to know about using a personal loan to start a business:

15 personal loans to start a businessWhat is the difference between an SBA loan and a personal loan?Pros of using a personal loan to start a businessCons of using a personal loan to start a businessApplying for a personal loan for a businessChoosing the right lender

15 personal loans to start a business

If you decide to take out a personal loan for your business, it’s important to consider as many lenders as possible. This way, you can find the right loan for your needs.

This is easy with Credible. You can compare your prequalified rates from our partner lenders that offer personal loans for business expenses below in just two minutes.

LenderFixed ratesLoan amountsLoan terms (years)

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
9.95% – 35.99% APR$2,000 to $35,0002, 3, 4, 5*Fixed APR:
9.95% – 35.99% APRVariable APR:
N/AMin. credit score:
550Loan amount:
$2,000 to $35,000**Loan terms (years):
2, 3, 4, 5*Time to fund:
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)Fees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except CO, IA, HI, VT, NV NY, WVCustomer service:
Phone, emailSoft credit check:
YesLoan servicer:
AvantLoan Uses:
Debt consolidation, emergency expense, life event, home improvement, and other purposesMin. Income:
$1,200 monthly

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.79% – 17.99% APR$10,000 to $50,0003, 4, 5, 6Fixed APR:
6.79% – 17.99% APRVariable APR:
N/AMin. credit score:
700Loan amount:
$10,000 to $50,000Loan terms (years):
3 to 6Time to fund:
Next business dayFees:
No prepayment penaltyDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Debt consolidation, home improvement, self-employment, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.99% – 35.99% APR$5,000 to $35,0002, 3, 4, 5Fixed APR:
4.99% – 35.99% APRVariable APR:
N/AMin. credit score:
600Loan amount:
$2,000 to $50,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as 1 – 3 business days after successful verificationFees:
Origination feeDiscounts:
NoneEligibility:
Available in all states except DC, IA, VT, and WVCustomer service:
PhoneSoft credit check:
YesLoan servicer:
Best Egg and Blue Ridge BankMin. Income:
NoneLoan Uses:
Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.99% – 24.99% APR$2,500 to $35,0003, 4, 5, 6, 7Fixed APR:
5.99% – 24.99% APRMin. credit score:
660Loan amount:
$2,500 to $35,000Loan terms (years):
3, 4, 5, 6, 7Time to fund:
As soon as the next business day after acceptanceFees:
Late feeDiscounts:
NoneEligibility:
 Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesLoan Uses:
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
7.99% – 29.99% APR$10,000 to $50,0002, 3, 4, 5Fixed APR:
7.99% – 29.99% APRMin. credit score:
Does not discloseLoan amount:
$10,000 to $50,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as 2 business daysFees:
Origination feeDiscounts:
NoEligibility:
Available in all states except CO, CT, HI, KS, NH, NY, ND, OR, VT, WV, WI, and WYCustomer service:
PhoneSoft credit check:
YesMin. Income:
NoneLoan Uses:
Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
7.04% – 35.89% APR$1,000 to $40,0003, 5Fixed APR:
7.04% – 35.89% APRMin. credit score:
600Loan amount:
$1,000 to $40,000Loan terms (years):
3, 5Time to fund:
Usually takes about 2 daysFees:
Origination feeDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
Phone, emailSoft credit check:
YesLoan servicer:
LendingClub BankMin. Income:
NoneLoan Uses:
Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
9.99% – 35.99% APR$2,000 to $36,5002, 3, 4Fixed APR:
9.99% – 35.99% APRMin. credit score:
580Loan amount:
$2,000 to $36,500Loan terms (years):
2, 3, 4Time to fund:
As soon as the next business dayFees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except NV and WVCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
$20,000Loan Uses:
Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.49% – 19.99% APR$5,000 to $100,0002, 3, 4, 5, 6, 7
(up to 12 years for home improvement loans)Fixed APR:
2.49% – 19.99% APRMin. credit score:
660Loan amount:
$5,000 to $100,000Loan terms (years):
2, 3, 4, 5, 6, 7*Time to fund:
As soon as the same business dayFees:
NoneDiscounts:
AutopayEligibility:
Available in all states except RI and VTCustomer service:
Phone, emailSoft credit check:
NoLoan servicer:
LightStreamMin. Income:
Does not discloseLoan Uses:
Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.99% – 19.99% APR1$3,500 to $40,00023, 4, 5, 6, 7Fixed APR:
6.99% – 19.99% APR1Min. credit score:
660
(TransUnion FICO®️ Score 9)Loan amount:
$3,500 to $40,0002Loan terms (years):
3, 4, 5, 6Time to fund:
Many Marcus customers receive funds in as little as three daysFees:
NoneDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
PhoneSoft credit check:
YesLoan servicer:
Goldman SachsMin. Income:
$30,000Loan Uses:
Credit card refinancing, debt consolidation, home improvement, major purchase, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
18.0% – 35.99% APR$1,500 to $20,0002, 3, 4, 5Fixed APR:
18.0% – 35.99% APRMin. credit score:
NoneLoan amount:
$1,500 to $20,000Loan terms (years):
2, 3, 4, 5Time to fund:
As soon as the same day, but usually requires a visit to a branch officeFees:
Origination feeDiscounts:
NoneEligibility:
Must have photo I.D. issued by U.S. federal, state or local governmentCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
Does not disclose

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.99% – 17.99% APR$600 to $50,000
(depending on loan term)1, 2, 3, 4, 5Fixed APR:
5.99% – 17.99% APRMin. credit score:
660Loan amount:
$600 to $50,000*Loan terms (years):
1, 2, 3, 4, 5Time to fund:
2 to 4 business days after verificationFees:
NoneDiscounts:
NoneEligibility:
Does not discloseCustomer service:
Phone, emailSoft credit check:
NoMin. Income:
Does not discloseLoan Uses:
Debt consolidation, home improvement, transportation, medical, dental, life events

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
6.95% – 35.99% APR$2,000 to $40,0003, 5Fixed APR:
6.95% – 35.99% APRMin. credit score:
640Loan amount:
$2,000 to $40,000Loan terms (years):
3, 5Time to fund:
As soon as one business dayFees:
Origination feeDiscounts:
NoneEligibility:
Available in all states except IA, ND, WVCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
NoneLoan Uses:
Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
8.93% – 35.93% APR7$1,000 to $50,0003 to 5 years 8Fixed APR:
8.93% – 35.93% APR7Min. credit score:
560Loan amount:
$1,000 to $50,000Loan terms:
3 to 5 years 8Time to fund:
Within one day, once approved9Loan types:
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchasesFees:
Origination feeDiscounts:
AutopayEligibility:
A U.S. citizen or permanent resident; not available in DC, SC, WVCustomer service:
Phone, emailSoft credit check:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
5.94% – 35.97% APR$1,000 to $50,0002, 3, 5, 6Fixed APR:
5.94% – 35.97% APRMin. credit score:
560Loan amount:
$1,000 to $50,000*Loan terms (years):
2, 3, 5, 6Time to fund:
Within a day of clearing necessary verificationsFees:
Origination feeDiscounts:
AutopayEligibility:
Available in all states except West VirginiaCustomer service:
EmailSoft credit check:
YesMin. Income:
Does not discloseLoan Uses:
Debt consolidation, credit card refinancing, home improvement, and other purposes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.37% – 35.99% APR4$1,000 to $50,00053 to 5 years4Fixed APR:
4.37% – 35.99% APR4Min. credit score:
580Loan amount:
$1,000 to $50,0005Loan terms (years):
3 to 5 years4Time to fund:
As fast as 1 business day6Fees:
Origination feeDiscounts:
NoneEligibility:
Available in all 50 statesCustomer service:
Phone, emailSoft credit check:
YesMin. Income:
$12,000Loan Uses:
Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposesCompare rates from these lenders without affecting your credit score. 100% free!

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All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | 10SoFi Disclosures | Read more about Rates and Terms

What is the difference between an SBA loan and a personal loan?

Personal loans are offered by private lenders — such as online lenders as well as traditional banks and credit unions — and can be used for almost any personal expense, such as covering business costs. With a personal loan, you can typically borrow $600 up to $100,000 or more with repayment terms from one to seven years, depending on the lender.

SBA loans, on the other hand, are partially guaranteed by the Small Business Administration. With these types of loans, the SBA guarantees lenders that it will pay up to 85% of the loan if the borrower defaults. These loans range from $25,000 up to $5 million with repayment terms from five to 25 years (depending on how you use the loan).

If you’re considering an SBA loan vs. a personal loan, here are some important points to keep in mind:

SBA loanPersonal loanFixed rates5% to 8% + prime
(depending on loan amount)
2.49%+
(with Credible partner lenders)
Variable rates2.25% to 4.35% + base rate
(depending on loan amount and term)N/ALoan amount$25,000 to $5 million$600 to $100,000
(depending on the lender)Repayment terms5 to 25 years
(depending on how loan is used)Typically 1 to 7 years
(depending on the lender)RequirementsYour business must: Operate for profitBe engaged in or propose to do business in the U.S. or its territoriesHave reasonable amount of owner equity to invest
(usually $1 for every $3 borrowed)Use alternative funding sources (including personal assets) firstCan vary by lender but typically must have:Good creditVerifiable incomeLow debt-to-income ratioCredit eligibilityPersonal and company credit must show positive payment historiesGenerally have good to excellent creditTime to fund5 to 10 business days for standard loans36 hours for express loansUsually about 1 week
(depending on the lender)

SBA loan requirements

SBA loans also have additional requirements compared to personal loans. To be eligible, your business must:

Operate for profitBe engaged in or propose to do business in the U.S. or its territoriesHave a reasonable amount of owner equity to invest (generally, $1 of your own money to invest for each $3 borrowed)Use alternative financial resources (including personal assets) before seeking financial assistance

These requirements can make it harder to qualify for an SBA loan as a new business owner compared to getting a personal loan — especially since you’ll also need to provide a full business plan to the lender.

Also keep in mind that both your personal and business credit history will be considered for an SBA loan. However, you’ll also have the opportunity to explain any extenuating circumstances that might have affected your credit history to the lender.

Can I get an SBA loan with bad credit?

Possibly. The Small Business Administration doesn’t have a minimum required credit score for its loans. Instead, it’s up to the lenders that offer these loans to determine who to approve. In general, the credit reports for both you and your company should illustrate positive payment histories and demonstrate your ability to manage your obligations.

However, you might still be able to get an SBA loan with bad credit — for example, if you’ve been in business for several years or if there are extenuating circumstances that led to your poor credit score. In these cases, it could still be worth it to apply for an SBA loan even if you have less-than-stellar credit.

Learn More: How to Get a Personal Loan

Can I get a personal loan with bad credit?

You’ll typically need good to excellent credit to qualify for a personal loan — a good credit score is usually considered to be 700 or higher. There are also several lenders that offer personal loans for bad credit, but these loans tend to come with higher interest rates compared to good credit loans.

If you have bad credit and are struggling to get approved for a personal loan, here are a few options to consider:

Apply with a cosigner. Having a creditworthy cosigner can increase your approval chances and might also get you a better interest rate than you’d get on your own. Just remember that because your cosigner shares responsibility for the loan, they’ll be on the hook if you don’t make your payments.Take out a secured loan. While most personal loans are unsecured, there are also some lenders that provide secured personal loans that require collateral. Because these loans are less risky for the lender, it could be easier to qualify for one even if you have poor credit. However, keep in mind that if you can’t make your payments, you risk losing your collateral.Improve your credit. If you can wait to take out a loan, it could be worth spending some time building your credit so you’ll have an easier time qualifying in the future. There are several potential ways to do this, such as making on-time payments on all of your bills or paying down credit card balances.

Check Out: Personal Loans to Consider When You’re Self-Employed

Pros of using a personal loan to start a business

Taking out a personal loan to start a business can be a good choice in some cases, but it isn’t right for everyone. If you’re considering a personal loan, here are a few potential benefits to keep in mind:

Lower rates: Personal loan interest rates tend to be lower than rates on credit cards.Might be easier to qualify for: Unlike with SBA loans, you don’t have to worry about providing a full business plan or having owner equity to be eligible for a personal loan. Fast funding: You can usually expect to get your funds within one week — though some lenders will fund loans as soon as the same or next business day after approval.

Cons of using a personal loan to start a business

Fewer options for bad credit: You’ll generally need good to excellent credit to qualify for a personal loan — which means you could have a hard time getting approved if you have poor or fair credit.Smaller loan amounts: Personal loans typically range from $600 to $100,000 — less than the $25,000 to $5 million you could get with an SBA loan. Shorter repayment terms: You’ll generally have one to seven years to repay a personal loan, depending on the lender. SBA loans, on the other, provide terms of 10 to 25 years, depending on how you use the loan. Personal loan prosPersonal loan consLower rates than credit cardsCould be easier to qualify for than an SBA loanFast fundingFewer options for bad creditSmaller loan amountsShorter repayment terms

If you decide to take out a personal loan for your business, be sure to consider your overall loan cost. This way, you can be prepared for any added expenses.

You can estimate how much you’ll pay for a loan using our personal loan calculator below.

Enter your loan information to calculate how much you could pay

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pplying for a personal loan for a business

If you’re ready to apply for a personal loan for your business funding needs, follow these four steps:

Compare lenders. Be sure to shop around and compare as many personal loan lenders as possible to find the right loan for your situation. Consider not only interest rates but also repayment terms, any fees charged by the lender, and whether the lender allows its loans to be used for business purposes. Pick a loan option. After comparing lenders, choose the loan option that best suits your needs.Complete the application. Once you’ve picked a loan option, you’ll need to fill out a full application and submit any required documentation, such as pay stubs or tax returns.Get your funds. If you’re approved, the lender will require you to sign for the loan so the funds can be disbursed to you. The time to fund for a personal loan is usually about one week — though with some lenders, you could get your money as soon as the same or next business day after approval.

Learn More: Where to Get a Personal Loan

Choosing the right lender

As you weigh your options, it’s critical to take the time to compare as many lenders as you can so you can find the best loan for your business needs. Here are several important points to consider as you do your research:

Loan uses: While the majority of lenders allow personal loans to be used for almost any personal expense, some limit the uses of their loans — and others specifically prohibit using their loans for business purposes.Interest rates: Your interest rate is one of the biggest factors that will determine how much you end up paying for your loan over time. Your credit score and the repayment term you choose will also impact the rates you qualify for.Repayment terms: You’ll generally have one to seven years to repay a personal loan, depending on the lender. While picking a longer term could reduce your monthly payments, it’s usually best to choose the shortest term you can afford to keep your interest costs low. Many lenders also provide lower rates to borrowers who opt for shorter terms.Loan amounts: Personal loans typically range from $600 to $100,000 or more, depending on the lender. You’ll need to think about exactly how much you’ll need for your business and which lenders provide large enough loans.Credit requirements: Most lenders require borrowers to have good to excellent credit to qualify for a personal loan. While some lenders provide bad credit loans, remember that these loans usually have higher interest rates in comparison. If you have bad credit, you might want to consider applying with a cosigner — not all lenders allow cosigners on personal loans, but some do.

If you’re ready to compare your loan options, Credible can help: You can see your prequalified rates from multiple lenders in two minutes — without affecting your credit.

Ready to find your personal loan?
Credible makes it easy to find the right loan for you.

Free to use, no hidden feesOne simple form, easy to fill out and your info is protectedMore options, pick the loan option that best fits your personal needsHere for you. Our team is here to help you reach your financial goalsFind My Rate
Checking rates won’t affect your credit

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The post Should I Take Out a Personal Loan to Start a Business? appeared first on Credible.

14 Home Prep Tasks to Take Care of Before Winter Hits

Winter weather can be hard on your home if you’re not prepared. But by taking care of a few key tasks, you can often avoid expensive damage and prevent premature wear and tear.

Even if you live in a milder climate, you’ll want to review the list below. See which home tune-up tasks you may want to perform now to keep your home clean, safe, and comfortable throughout the coldest, darkest days of the year.

Here are 14 tasks to complete before winter arrives:

Get professional maintenance for your heating systemTest your carbon monoxide detectorsLocate air leaksInsulate your homeUpgrade your windowsPrepare your pipesInstall a programmable or smart thermostatInsulate your hot water tankReverse the direction your ceiling fan spinsHave your fireplace and chimney inspectedUpdate your emergency supplies for winter stormsClean your gutters and downspoutsInspect your roofCheck tree health

1. Get professional maintenance for your heating system

It’s smart to hire a professional to inspect your heating system before the cold weather sets in. They’ll perform routine maintenance that you might not have the time for, like changing air filters, vacuuming registers, and cleaning dirt and debris in and around the unit that could harm its functioning.

They’ll also check for leaks, identify obstructions, lubricate moving parts, look for signs of corrosion, and generally use their expertise to extend your system’s life and minimize the chance of it breaking down on the coldest day of the year.

Transform Your Space: 8 Popular Pandemic Home Renovations

2. Test your carbon monoxide detectors

Carbon monoxide is a dangerous odorless gas that can send you to the emergency room or even kill you. You might think you’re coming down with the flu when you’re actually being poisoned by carbon monoxide. If you’re sleeping, you may not experience any symptoms before it’s too late. Pets are susceptible, too.

Heed these warnings from the Centers for Disease Control and Prevention, and make sure you have working carbon monoxide detectors throughout your home, especially near sleeping areas. They’re important year round, but especially in winter. Oil and gas furnaces, fireplaces, and generators can cause toxic CO to build up in your home.

3. Locate air leaks

If you want to go all out, you can hire a professional to conduct a blower door test. This test can locate leaks you might be unaware of and identify places where your home could use more insulation, according to the US Department of Energy.

It’s also fine to look for leaks yourself. Homes tend to leak air in places you can easily check: around doors and windows, electrical outlets, baseboards, pipes, vents, and anywhere else there’s a hole in a wall or connection between the inside and the outside. Focus on fixing the biggest leaks with caulking and weatherstripping.

Check Out Other Simple Projects: 18 Home Improvement Projects You Can Wrap Up in a Day

4. Insulate your home

Along with sealing leaks, adding insulation to your home can help you maintain a more comfortable temperature while using less energy. Basements, attics, walls, and other areas where your living space meets the outdoors or an unconditioned space (like an attached garage) are all candidates for more insulation, especially in older homes.

Hiring a professional will cost more up front but may pay off through better results. An expert can evaluate where additional insulation will make the biggest difference, how much you need, and the best type to use. They can also install it correctly to make sure it’s effective.

5. Upgrade your windows

If you have old windows, especially single-paned ones, you know they’re not great at keeping your home warm in the winter or reducing noise from outside. Sometimes, they’re unattractive as well.

Replacing every window in your home can be an expensive project (one you might want to finance with a home improvement loan), and it might take you years to recoup your investment. At the same time, though, you’ll save money on heating and cooling costs over the long run, make your home more comfortable, and boost the property’s value.

Tip: If you want to keep costs down, consider replacing the windows in one room where you’ll notice the difference most, like your bedroom. Homeowners can expect to spend $300 to $1,200 for one new window, depending on type and size, plus $150 to $800 for installation, according to HomeAdvisor.

You may be able to claim a federal tax credit of up to $200 for Energy Star-rated windows you purchase before Dec. 31, 2021.

6. Prepare your pipes

Insulating exposed pipes is a simple and inexpensive project most able-bodied homeowners can do themselves. Six feet of foam pipe insulation from a major home improvement retailer will cost you less than $5. Installing it is as easy as slipping the insulation over the pipe and taping the seams.

This project can reduce your water heating costs, but the real savings lie in preventing burst pipes and water damage to your home during freezing weather. You’ll also want to disconnect garden hoses and place insulating covers over outdoor faucets.

7. Install a programmable or smart thermostat

A smart thermostat can also help prevent burst pipes by letting you monitor and control your home’s temperature from your smartphone, even if you’re out of town. You can find a quality smart thermostat for anywhere between $100 to $250.

Energy Star-rated smart thermostats can help you save even more money on heating and cooling costs. They also offer convenient features like voice activation, occupancy sensing, and energy use monitoring.

Spend less: Your electric company or city might have rebates on qualifying smart thermostats, reducing your overall cost. Check online or contact your electric provider to see if there are any offers you can take advantage of.

A programmable thermostat that’s not WiFi-connected can also reduce your energy use. They cost less, at around $30 to $90, but you may spend more time adjusting the settings with schedule and weather changes.

To install a new thermostat, you might want to hire an electrician or HVAC technician, but some units are simple enough to install yourself.

8. Insulate your hot water tank

If you have an older electric water heater, correctly installing an insulation blanket made specifically for this purpose can save you money. The insulation will reduce some of the heat the tank loses to the air around it, especially if your tank is in an unconditioned space like a garage or outside cabinet.

The job isn’t complicated, but you may need a helper. Ask your electric company: they might come out and do it for you. Supplies will cost around $30, but the job can pay off after the first year.

9. Reverse the direction your ceiling fan spins

You can run your ceiling fans on low to make your home more comfortable and save energy during the winter. All it takes is nudging a small switch on the fan (or fan remote control) so the blades spin clockwise.

Changing the blade direction will help pull cool air up from the floor and push warm air down from the ceiling. You can do this task yourself with a stepladder and good balance.

Warning: Don’t attempt this task with fans on high ceilings: not only is it dangerous, but it won’t give you any benefit.

10. Have your fireplace and chimney inspected

Having your fireplace and chimney professionally inspected and possibly cleaned before you use it for the first time each year is a critical safety task. No one wants smoke building up in their living space, carbon monoxide poisoning, or a chimney fire.

That said, you may want to avoid burning wood in your home at all. The chemicals and ultrafine particles in wood smoke have the potential to cause life-threatening health problems. If you love sitting fireside, consider a professional conversion to a cleaner-burning gas fireplace.

11. Update your emergency supplies for winter storms

A winter storm could leave you without power for days and make roads unsafe. The insulation and leak sealing suggested above can really help in such a situation when you’re sheltering in place at home.

Here are a few supplies you’ll want to keep handy in case of a winter emergency:

Extra blankets and warm clothingBottled water and at least a 3-day supply of foodAir-activated hand warmersBackup power supplyHand crank radioBattery-powered LED lantern or flashlightEmergency supply of medicines (including pain relievers, prescription medications, and bandages)

12. Clean your gutters and downspouts

Free-flowing gutters protect your home from water intrusion and moisture damage. When your gutters get clogged with debris, they won’t work correctly: rain and melting snow can’t flow through them and may freeze, and the weight of that ice can cause your gutters to sag and pull away from the roof edge. Clogged gutters can also encourage harmful ice dams on your roof.

If you have a one-story house and a sturdy ladder, you might consider cleaning your gutters yourself. Otherwise, the safety risks of falling off a ladder are too great. Leave the task to a professional. You can expect to pay around $90 to $225 for gutter cleaning on a two-story home, according to HomeAdvisor.

Fun Ideas: 16 Fast Weekend Projects to Boost Your Home’s Curb Appeal

13. Inspect your roof

A roof inspection in advance of winter weather can spare you from the water damage of leaks. And a professional is usually the best choice for this job. Not only do you want to avoid falling off your roof, you most likely don’t have the training to identify potential weak spots like loose or missing flashing and poor seals around vents.

If your roof is in really bad shape, it may be time to replace it. The national average cost for new asphalt shingles, including installation, is around $8,500, according to HomeAdvisor. If you want to use higher-end shingles, need to replace rotted roof decking, or decide to add ventilation, costs can be higher.

Tip: Accessing your home equity through a home equity loan or line of credit can make sense in a situation like this, because protecting your home from damage is essential.

14. Check tree health

Most of us don’t take a close look at our trees on a regular basis. Even if we did, we might not know when they’re sick, weak, or otherwise posing a threat to our home. The worst-case scenario is a toppled tree crashing through your roof during a winter storm, causing expensive damage and leaving your home exposed to the elements.

To avoid harm to your home — and yourself — from unstable trees or large limbs that might break off due to winter weather, hire an arborist. These highly trained tree experts can help prevent problems as well as evaluate possible damage after a storm.

Read More: 10 Ways to Craft an Elegant Outdoor Space

Paying for winter-related home projects

If you’re concerned about paying for some of the pricier items on this list, a cash-out refinance could be a good solution. Mortgage rates are near historic lows, and home values have swung up across the country.

By replacing your existing mortgage with a new, less expensive one and cashing out some of your equity, you may be able to slide some essential home projects into your budget as well.

Credible makes it easy to compare mortgage refinance options. You can see rates from all of our partner lenders without leaving our platform. Check out the table below to get started.

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Underwater Mortgage: What Is It and What Are Your Options?

Your home can be your biggest asset and a primary tool for building wealth over the long term. But like other assets you invest in, such as stocks and bonds, the value fluctuates. These fluctuations can put you underwater with your mortgage.

Here’s what you need to know about underwater mortgages and what you can do if you have one:

What is an underwater mortgage?Signs of an underwater mortgageProblems with underwater mortgagesUnderwater mortgage options

What is an underwater mortgage?

An underwater mortgage, also known as an upside-down mortgage or having negative home equity, is a home purchase loan with a principal balance that exceeds the value of the home — in other words, you owe the lender more than your home is worth.

Underwater mortgages were common during the Great Recession from 2007 to 2009, when home values throughout the country plummeted and continued to decline for several years after the recession’s end. Homeowners with purchase or refinance loans based on pre-crash home values found themselves underwater as a result.

Underwater mortgages are less common today because of tighter underwriting standards and record price increases since the pandemic. Median home prices increased nearly 25% from June 2020 to June 2021, so there’s a good chance that your home is worth more now than when you bought it.

Signs of an underwater mortgage

Situations that might push you into negative equity include a decrease in local property values. A low appraisal is also a good indicator that you might be underwater on your mortgage.

Here’s how to find out if your loan is underwater.

Figure out how much you owe

You can find out how much you owe by checking your mortgage statement. You’ll see the amount listed under “principal balance” or “outstanding principal”.

If you need to know the exact amount immediately, you’re best off calling your loan servicer and asking for your payoff amount. That figure will include interest and fees that have accrued since the lender prepared your statement.

Whether you’re researching rates or looking to buy a home, Credible is here to help. You can compare prequalified rates on home loans from all of our partner lenders in just a few minutes.

Credible makes getting a mortgage easy

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Determine your home’s value

The only way to get an accurate opinion of value is to have your home appraised by a licensed home appraiser. A professional home appraisal is usually worth the cost if you’re hoping to sell your home. Otherwise, you can get a ballpark figure for free from a real estate portal site like Redfin or Realtor.com.

Subtract your home value from your principal balance

The final step is a simple math problem that will show whether you’re underwater:

Value – Balance = Equity

If, for example, your home is worth $200,000 and you owe $225,000 on your mortgage, the equation will look like this:

$200,000 – $225,000 = -$25,000

In this scenario, you’re $25,000 underwater on your home loan.

Problems with underwater mortgages

An underwater mortgage doesn’t always have a negative impact on a homeowner. If your mortgage is affordable and you’re not planning to sell or refinance, you might not worry about it at all. However, when that’s not the case, an underwater mortgage can put you at a serious disadvantage.

Refinancing

Lenders protect themselves against default by limiting how much of your equity you can refinance. The limit might be 80% for a cash-out refinance, for example, or 95% for a rate-and-term refinance. But if you have negative equity, you have nothing to draw against.

Even in the event you find a loan that lets you refinance 100% of your home’s value, the new loan won’t fully repay the underwater one. In that case, you’ll have to pay enough cash at closing to make up the difference.

Also See: How to Refinance Your Mortgage in 6 Easy Steps

Selling

Most mortgage loans have a due-on-sale clause that makes the loan due in full when the owner sells. In the case of an underwater mortgage, where the sale won’t cover the amount needed to pay off the loan, you’ll need enough cash at closing to make up the difference.

Foreclosure

Your lender can’t foreclose simply because you’re underwater, but being underwater increases your risk of foreclosure because it limits your options. Since you might not be able to refinance or sell the home, there’s a greater chance of your home going into foreclosure if you can no longer keep up with the mortgage payments.

Underwater mortgage options

You don’t necessarily have to take action when your mortgage is underwater, but it’s probably a good idea, even if only to ward off future problems. If you’re already struggling, a quick response can keep you from losing your home.

Stay in your home

The simplest option is to remain in your home and continue making your regular mortgage payments. By paying down your principal balance, you’ll continue to build equity. Consider making extra principal payments to pay down your loan balance faster.

You can also try to increase the value of your home. Home remodeling projects rarely generate a positive return on investment unless you can do the work yourself, but simple jobs that improve curb appeal can give your home value a boost for little cost beyond elbow grease.

Tip: If you can’t afford to make extra principal payments or remodel your home, sit tight and wait for a market cycle more favorable to sellers. This can right your mortgage naturally as values appreciate.

Refinance

Refinancing an underwater mortgage is tricky because you typically need equity to do it. However, you might be in luck if your loan is backed by Freddie Mac.

The Freddie Mac Enhanced Relief Refinance is meant for homeowners whose mortgages are underwater. This option could make your loan more affordable by lowering your mortgage rate and monthly payment or allow you to increase your equity faster with a shorter repayment period.

The program is available if you took out your home loan on or after Oct. 1, 2017, and are current with payments. Additional requirements include having had no 30-day delinquencies within the last six months and no more than one 30-day delinquency in the last year. Fannie Mae has a similar program but has paused it temporarily.

What about government-backed loans? Certain government-backed loans may still allow you to refinance if your mortgage is underwater. The FHA streamline refinance program, for instance, doesn’t require an appraisal, so you can refinance your FHA loan even if you have negative equity.

On the other hand, the VA no longer guarantees loans where the loan-to-value ratio exceeds 100%. Some lenders do set a higher cap on streamline refinances, but the cap includes closing costs and funding fees that the lender rolls into the loan. These costs can put you even further into negative equity.

Sell your home

You’ll have to meet one of two conditions to sell a home with an underwater mortgage:

Make up the difference between your loan balance and the sale price with a cash payment at closingGet permission from your lender to sell short

Unless you’re struggling to make payments, in which case you probably lack the funds to bring cash to closing, it doesn’t make sense to sell while your mortgage is underwater. But if you are struggling, a short sale can be an alternative to foreclosure.

Your lender won’t allow a short sale unless you document a hardship that’s likely to keep you from making payments for the foreseeable future, such as a job loss or disability. It can also take months before your lender approves the short sale.

In the meantime, you might rack up enough late payments that a short sale will do as much harm to your credit as a foreclosure would. And if the lender does approve the short sale, you might have to pay tax on the amount of the loan balance the lender forgives.

Walk away

Your last resort is to simply walk away from your home and let the lender foreclose on it. This option is called a strategic default because you’ll have concluded that you’re unable to stay in the home and instead plan to use the money to pay off other debt or build savings for rent.

Foreclosure will negatively impact your credit and remain on your credit report for seven years. As such, you might find it difficult to rent a home. Paying some or all of your rent upfront, though, gives you a better chance at having your rental application approved.

Important: One more option you can try before walking away is a loan modification. This is an agreement between you and your lender that changes the terms of your loan and makes your mortgage payment more affordable. Your credit might still take a hit, but it can at least help you avoid foreclosure. Talk to your lender to see if you qualify.

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How to Shop for a Mortgage

You might feel like you’re ready to buy a home, but in addition to hunting for the perfect property, you’ll likely need to shop for the right mortgage loan before you commit to that purchase.

Knowing how to shop for a mortgage and compare offers can help you find the home loan that fits your situation and potentially save you thousands of dollars.

Here are some important things to consider when you’re shopping for a mortgage:

Consider mortgage typesCheck your credit scoreReview your credit reportExplore different financing optionsShop around for best ratesGet pre-approved

1. Consider mortgage types

A mortgage loan allows you to borrow the funds needed to buy a home. Understanding the features and requirements of each major mortgage program can help you figure out which one is right for your situation.

Most mortgages require a minimum down payment, usually around 3% to 5% of the sale price, and a minimum credit score.

If you’re looking for a great mortgage rate, Credible’s streamlined process can help. We make comparing multiple mortgage lenders easy. In just a few minutes, you can see prequalified rates all without leaving our platform.

Credible makes getting a mortgage easy

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Conventional loan

Conventional loans are mortgages offered by private banks, credit unions, and mortgage lenders but aren’t backed by government institutions. Instead, conventional loans are typically backed by Fannie Mae and Freddie Mac, two agencies that purchase mortgages and set borrower qualification requirements.

To get a conventional loan, you usually must pay at least 3% to 5% of the home’s purchase price as a down payment. You’ll also need a credit score of around 620 or higher, and the loan amount must follow conforming loan limits.

FHA loan

An FHA loan is a mortgage that’s funded by a bank, credit union, or other mortgage lender but insured by the Federal Housing Administration (FHA).

The government guarantee allows mortgage lenders more flexibility here, so you might qualify with a credit score of 580 if you can put down at least 3.5%. With a credit score in the 500 to 579 range, you’d need a down payment of 10% or more.

VA loan

VA loans are funded by private lending institutions and backed by the U.S. Department of Veterans Affairs. These mortgages are available to eligible members of the armed forces, veterans, and surviving spouses.

If you qualify, you could get approved for a mortgage with a 0% down payment and no mortgage insurance, though you’ll typically need to pay a funding fee. The VA doesn’t set minimum credit score requirements, but your lender may have its own limit.

USDA loan

USDA loans are guaranteed by the U.S. Department of Agriculture. These loans are designed for low-income borrowers who plan to purchase a home in a USDA-designated rural area.

You won’t have to make a down payment on a USDA loan, but you’ll be responsible for paying an upfront fee and an annual fee.

Keep Reading: What Is a Mortgage? Everything to Know About Home Loans

2. Check your credit score

When you apply for a mortgage, lenders typically pull your credit scores from all three major credit bureaus: TransUnion, Equifax, and Experian. Your credit scores help lenders predict how likely you are to repay a loan. As such, it factors into whether you’ll qualify for a mortgage and the loan terms you’ll receive.

All three of your credit scores may differ, so the lender will order the scores from lowest to highest and use the middle score to determine loan qualification. So, for example, if your scores are 620, 630, and 640, the lender may use 630 to make a lending decision.

A higher credit score — usually in the mid-700s and above — can help you get a good mortgage rate and potentially save you thousands of dollars in interest over the life of the loan. It may also help you qualify for more mortgage programs and a lower down payment requirement.

Tip: If your credit needs work, you may want to pause your mortgage search for a few months and focus on improving your credit score.

3. Review your credit report

Lenders will also review your credit reports, which are documents that capture the details of your credit history. Many consumers have a credit report with each of the three major credit bureaus.

Your credit report includes a list of credit accounts opened in your name, such as credit cards and student loans, plus the following:

Payment historyMonthly minimum paymentBalance informationWhether the account is in good standing

Lenders use the information in your credit report to:

Find your monthly financial obligations, which impacts your debt-to-income ratioLook for signs of loan delinquency, such as missed paymentsCheck for red flags, such as bankruptcy or foreclosure

Tip: Credit scoring companies, such as FICO and VantageScore, use the information in your credit reports to calculate your credit scores. Unfortunately, mistakes on credit reports are common — and these errors may affect your credit score and your ability to qualify for a mortgage.

So, before applying for a mortgage, check your credit reports and dispute any mistakes. You can pull your credit reports for free once a year at AnnualCreditReport.com.

4. Explore different financing options

A mortgage lender — such as a bank or credit union — is the company that funds your home loan. Each lender offers different loan programs and sets different borrower requirements. It’s important that you get quotes from several types of mortgage lenders to find one that offers the best loan program for you.

Banks

Banks are for-profit financial institutions that typically offer a number of different products such as mortgages, credit cards, checking and savings accounts, and more. Many large banks have branches nationwide or throughout a specific region where you can get in-person support, and they also might offer a wider selection of mortgage products.

One downside to banks is that they tend to charge slightly higher interest rates on home loans compared to credit unions, according to a side-by-side comparison by the National Credit Union Administration.

Credit unions

Credit unions are nonprofit organizations that offer banking services to their members. In addition to offering lower interest rates on mortgages and other financial products, credit unions have historically earned the highest customer satisfaction ratings.

However, you’ll need to join a credit union to get a mortgage. Some credit unions are open to anyone, but others may require you to work in a certain industry or live in a certain area.

Other mortgage lenders

You might also find a home loan with another type of lender. For instance, online lenders, such as Rocket Mortgage, offer an end-to-end digital process. You may be able to get pre-approved, upload loan documents, and close on the loan all online. By saving money on overhead costs, online lenders may also be able to offer lower rates or special discounts.

5. Shop around for best rates

Getting rate quotes from multiple lenders and comparing offers is one of the easiest ways to save money on your mortgage. That’s because the interest rate is one of the key components of the mortgage’s total cost, and rates can vary considerably with each lender. Despite this, about half of homebuyers skip shopping for the best rate.

According to the Consumer Financial Protection Bureau, borrowers could save $300 a year on average by shopping for more than one rate quote. You might save even more, depending on what you qualify for.

Example: Let’s say you get rate quotes from two different lenders on a $200,000 home loan, and you compare the monthly principal and interest payments on each. With a 3% interest rate, you save $44 per month compared to the same loan with a 3.5% rate. That might not sound like much, but it adds up to $528 in savings per year or $15,840 over a 30-year term.

Get Started: Find Your Mortgage Rate Today

6. Get pre-approved

A pre-approval is a letter from a mortgage lender that shows how much you’re qualified to borrow. This can help you set a homebuying budget and strengthen your purchase offer when you find a home you want to buy.

To start the process, you can contact a lender and ask for a pre-approval. They’ll pull your credit, look over your financial documents, and gauge how much money you have for a down payment. If you fit qualification requirements, the lender will hand you a mortgage pre-approval letter.

Getting pre-approved with Credible: With Credible, you can generate a streamlined pre-approval letter based on your unique situation. It only takes a couple of minutes to see loan details from all of our partner lenders. We also provide transparency into lender fees that other brokers typically don’t.

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Construction Loans: What They Are and How They Work

Building a home gives you an opportunity to have everything you could possibly want in a home — within your budget, of course. You don’t have to be rich to make it happen, you just have to qualify for a construction loan.

Construction loans are different from traditional mortgages. For one, a traditional mortgage is a long-term loan that helps you pay for an existing home, whereas a construction loan is a short-term loan that pays for the building of a new home and can convert into a traditional mortgage once the building process is completed.

Here’s what you need to know about the different types of construction loans and how they work:

What is a construction loan?What does a construction loan cover?How do construction loans work?Construction loan ratesConstruction loan typesHow to get a construction loanIs it hard to get a construction loan?How to choose a construction loan lender

What is a construction loan?

A construction loan allows you to borrow money to build or renovate a home.

When you buy a move-in ready home, the mortgage only needs to cover the purchase price and sometimes the closing costs.

When you build a home (or buy a home you want to overhaul), there are more steps involved: buying land, paying contractors, passing inspections. This more complicated process warrants a different type of loan.

Learn More: How Much It Costs to Renovate a House

What does a construction loan cover?

Construction loans pay for costs like:

LandArchitectural plansDesign feesBuilding permitsConstruction materialsContractor laborContingency reserves (in case your project goes over budget)Interest reserves (to cover your interest expenses during construction)Closing costsLong-term financing once construction is complete

How do construction loans work?

A construction loan is designed to pay for work in stages. This arrangement, called a “draw schedule,” reduces the risk to both the borrower and the lender that the builder will get a huge sum up front and fail to complete the work.

It also reduces the risk of shoddy work, as the lender will require inspections after each phase of building before releasing more funds. In fact, construction lenders require borrowers to work with experienced builders that do a high volume of work and that are financially sound, licensed, and insured.

While you won’t find construction loans at Credible, we can help you secure a competitive rate on your next conventional mortgage. In just a few minutes, you can compare loan options from all of our partner lenders — it’s easy and free.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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Construction loan rates

Construction loan interest rates vary by lender, but can be similar to existing home loan rates or a few percentage points higher. Having a strong borrower profile (such as an excellent credit score and debt-to-income ratio) and working with a lender that specializes in construction loans will help you qualify for the best possible rate.

Construction loans can have either a fixed or variable interest rate during the construction phase. If you choose a construction loan with a variable interest rate, it’s important to understand the range within which your interest rate can fall and when you’ll be able to lock the rate on your permanent (post-construction) mortgage. That said, permanent loans can have adjustable rates, too.

If you don’t want that uncertainty, seek out a construction-to-permanent loan with a fixed rate so that the rate stays the same during the construction phase and permanent phase.

Learn More: How Much Does It Cost to Build a House in 2021?

Construction loan types

There are several types of construction loans. Learn which type might be right for you.

Renovation loan

A renovation loan is a type of construction loan that helps you buy an existing home and pay for any major structural and aesthetic changes. Examples of renovation loans include the FHA 203(k) loan and the Fannie Mae HomeStyle loan.

The key difference between a renovation loan and a regular purchase loan is that it gives you money to buy the home as well as to fix it up. This may mean borrowing more money than the home is currently worth.

Good to know: Real estate investors will often use a renovation loan to buy a fixer-upper. The idea is to bring the home’s value up through renovations, ideally to a higher value than the amount borrowed for instant equity.

Construction-to-permanent loan

Similar to a renovation loan, a construction-to-permanent loan combines what would normally be two loans. It gives you both money to build the home and the long-term financing to pay for the home over time.

Instead, you’ll have one loan with one closing, one appraisal, and one set of closing costs. Plus, you’ll only have to qualify once. If your financial situation changes while your home is being built, you’ll still be able to move in.

Good to know: You’ll make interest-only loan payments during construction (or borrow extra to cover this expense) and principal and interest payments after construction.

A construction-to-permanent loan will also allow you to finance the purchase of the land if you don’t already own it. Or, if you have an existing lot loan, you can use a construction-to-permanent loan to pay it off.

FHA construction loan

Borrowers with smaller down payments and lower credit scores may want to consider an FHA construction loan. These loans require a borrower contribution of just 3.5%. You can use your land equity toward your down payment if you’ve already purchased the land you’ll be constructing your home on.

The FHA’s construction loan has a single closing (meaning it’s a construction-to-permanent loan) and doesn’t require you to make any payments during the construction process. The interest rate may be fixed or variable during construction.

The FHA also allows you to be the homebuilder if you’re a licensed general contractor. The minimum credit score to qualify tends to be 620 or 640, depending on the lender.

Important: FHA loans come with additional fees, including upfront mortgage insurance and monthly mortgage insurance premiums.

VA construction loan

Qualifying military service members with VA loan eligibility may want to consider a VA construction loan to build a home. These loans allow up to 100% financing that covers both the land and home construction.

The VA guarantees two types of construction loans:

One-time close loan (construction-to-permanent)Two-time close loan (a construction loan followed by a separate permanent loan)

As its name suggests, a two-time close loan involves two separate closings and, in turn, requires you to pay two sets of closing fees.

When you get a VA construction loan, you won’t make any payments during the construction phase. Instead, your loan term will be shortened by the length of the construction period. If it takes a year to build your home, you’ll pay it off over 29 years instead of 30.

Good to know: You must use a registered VA builder. Lenders are allowed to charge a construction fee of up to 2% of the loan amount plus a 1% origination fee.

The VA requires the builder to cover a number of fees that borrowers might pay on other construction loans, such as loan interest during construction, inspection fees, and hazard insurance premiums. Like other VA loans, the veteran must pay a VA funding fee.

Owner-builder construction loan

If you’re a professional builder and want to construct your own home, you can get an owner-builder loan by proving that you’re experienced, licensed, insured, and have a financially sound business. You’ll also need to meet the standard personal financial requirements.

This type of loan may be attractive if you want the cost savings, control, and personal satisfaction of building your home yourself.

Tip: The VA doesn’t guarantee this type of construction loan, but the FHA does. You can also get an owner-builder construction loan from a private lender.

One-time close construction loan

A one-time close construction loan (also called a single-close construction loan or construction-to-permanent loan, as discussed above) is any construction loan where a single loan covers your entire project. For example, a VA construction loan can also be a one-time close construction loan.

Over the months it takes to build your home, your financial situation and interest rates may change. These changes can affect loan costs and your ability to qualify for a permanent loan. In addition, each loan requires its own down payment, underwriting, and closing costs.

Tip: A single-closing loan can save you a lot of time, money, and uncertainty. Without this type of loan, you might need three loans: one loan to finance the lot, a second loan to build the home, and a third loan to pay off the first two loans plus the home itself.

Learn More: Buying New Construction: Pros, Cons, Step-by-Step Guide

How to get a construction loan

Like with any home loan, you’ll need to meet a certain set of requirements to obtain a construction loan. Requirements vary by lender and by the type of construction loan you’re applying for.

Construction loan requirements

In general, here are the criteria you’ll want to meet to qualify for a construction loan:

Credit score: You’ll want to have a credit score of at least 620 to qualify for an FHA or VA construction loan. For a Fannie Mae single-close loan, the minimum credit score is 700.Down payment: For a conventional construction loan, you may need a down payment of as little as 5%. Sometimes you’ll need 10% to 20% of the sales price (land plus construction costs) or equity from your land value. An FHA construction loan requires a down payment of 3.5%, while a VA construction loan doesn’t have any down payment requirement.Debt-to-income ratio: Your DTI should be 43% or lower. A higher ratio may be allowed if you otherwise have strong finances.Repayment plan: Construction loans usually require no payments or interest-only payments during the construction phase. You’ll make fully amortizing principal and interest payments once construction is complete.

Steps to get a construction loan

Here’s how to get a construction loan:

Get pre-approved with a construction loan lender.Sign a contract with a builder. Make sure it has a loan contingency so you can exit the contract if you can’t finalize your construction loan.Submit your builder contract and the usual underwriting documents to your lender for approval. If you already own the land you will be building on, submit a copy of the deed, survey, and, if you bought the land recently, the settlement statement.Get a “subject to completion” appraisal for your proposed home.Get final approval and close on your construction loan.

After closing, construction can begin. Your lender will pay your builder through a series of disbursements and will inspect each phase of work.

Once construction is complete, your construction loan will be modified to a permanent loan or you’ll obtain permanent financing.

Is it hard to get a construction loan?

It shouldn’t be hard to qualify for a construction loan if you’re working with a reputable builder and you have a strong financial profile.

However, there are more steps in the qualification process, so it can be more involved and take longer than qualifying for a traditional mortgage.

How to choose a construction loan lender

The first thing you should look for when choosing a construction lender is expertise with construction loans. A lender that processes a high volume of construction loans and understands their intricacies will be easier to work with.

Chances are you have never built a home before, so you’ll want to choose a lender who can help you manage the construction process most effectively. A lender who has gone through the homebuilding experience numerous times will have a strong sense of how the process is supposed to work, what can go wrong and how to avoid problems. They can help you make sure your build gets done correctly.

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