Think your student loans will keep you from getting a mortgage? Maybe not. SoFi is a new kind of lender for successful college grads. If you're a financially responsible young professional, SoFi offers a mortgage with lower down payments and more flexible debt to income limits.

Traditionally, even well qualified homebuyers face a dilemma when applying for a mortgage: Put at least 20 percent down or pay private mortgage insurance (PMI).

A new mortgage product from SoFi changes that equation.

SoFi is a rapidly growing marketplace lender focused on helping ambitious professionals get better financing. SoFi’s student loan refinancing product*, with fixed rates as low at 3.899 percent and variable rates as low as 2.80 percent, is already saving some Money Under 30 readers thousands in interest on their student loans. Could a SoFi mortgage do the same?

About the SoFi mortgage

Like Money Under 30, the SoFi mortgage is geared toward young adults with bright futures. By taking a unique approach to underwriting, SoFi can approve qualified applicants for more financing —and at potentially better terms—than traditional lenders. (SoFi does not offer mortgages in Virginia).

In our opinion, this will be especially attractive to successful young professionals looking to buy in expensive real estate markets (think San Francisco, where the median home price in 2012 was $727,600 compared to the national median of $258,300, according to US Census data).

In hot real estate markets, conventional home affordability guidelines don’t always apply. Although people in these markets tend to earn more than they would elsewhere, their higher salaries often don’t keep pace with housing costs. And that can make it difficult to qualify for traditional mortgage products.

SoFi mortgage loans can make owning a home in these areas possible, thanks to:

  • 10 percent down payment options (with no PMI)
  • Flexible debt-to-income limits
  • No restrictions for first-time homebuyers

Who can qualify?

The SoFi mortgage is for borrowers purchasing primary, single-family residences (not investment properties).

As of this writing, SoFi is issuing loans in the following 22 states and Washington. D.C.: Alabama, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maryland, Minnesota, New Hampshire, New Jersey, North Carolina, North Dakota, Pennsylvania, Rhode Island, Texas, Vermont, Washington, Wisconsin, and Wyoming. (Expect more states to become available as SoFi expands its program.)

To be eligible, you or your cosigner must be a US citizen or permanent resident and you must have graduated from a selection of Title IV accredited universities or college programs.

Of course, you’ll also need good credit and sufficient income to afford your loan.

Who benefits?

Although a SoFi mortgage can be a great option for any qualified homebuyer, one underserved category they are helping in particular is the high-earner with student loans. For example, the doctor or lawyer with a six-figure income…and a six-figure grad school debt. These folks might not have believed they could qualify for a mortgage due to their student loans, but SoFi’s advanced underwriting criteria and flexible debt-to-income limits can make it possible.

Traditional lenders may reject your mortgage application because your high student loan debt puts you over their debt-to-income ratio. (When underwriting a mortgage, traditional lenders require that your total monthly debt payments are less than 40 or 45 percent of your pre-tax income. So if you earn $10,000 a month, have $2,000 in student loan payments and want to take on a $3,000 a month mortgage payment, you wouldn’t qualify with a traditional lender.)

With SoFi, you have a better chance of qualifying—and of getting a better rate. (But I speculate. Although flexible debt-to-income limits are their selling point, I don’t know where their limits are – and every borrower is different).

Terms and rates

SoFi offers three mortgage options: 30-year fixed, 15-year fixed and a 7/1 adjustable-rate mortgage (ARM).

Interest rates depend, in part, on how much of a down payment you can make.

The application process

If you’ve ever applied for a mortgage before, you know that it can be a never-ending circus of back-and-forth phone calls and chasing documents.

While proper documentation is the nature of mortgage underwriting, a big advantage of a SoFi mortgage is a streamlined, mostly-online application process, outlined in their diagram below:

Sofi mortgage application process

The first step to a SoFi mortgage is pre-qualification. This step will tell you whether you’re likely to be approved for a loan and, if so, your interest rate and eligible loan amount. The nice thing about a pre-qual is that – although SoFi will check your credit – the inquiry will not affect your credit score at this step.

If you decide to move forward with the application, you’ll go through pre-approval (the part where you supply your latest pay stub and other documents) and, once you’re under contract on a property, the appraisal and closing.

How fast can you close? SoFi states that “typical applications close in less than 21 days”. So even if you’re close to pulling the trigger on a home (or under contract already), SoFi might still be worth a look.

Why SoFi?

Frankly, you can get a mortgage almost anywhere. Your neighborhood mortgage broker, a dozen local banks and credit union and numerous nationwide 800-number lenders would love to compete for the chance to loan you money.

Although SoFi isn’t for everybody, you should consider applying for a mortgage with SoFi if:

  • You have between 10 and 20 percent to put down on a home and want to avoid paying PMI.
  • You’re a prime borrower looking for a competitive interest rate.
  • You only have time for a fast, efficient mortgage process.
  • You‘re a high-earner who—because of student loans—is brushing up against the traditional debt-to-income limits enforced by traditional lenders.
  • You need to borrow an above-average amount (sometimes called a “jumbo” loan) because you live in an expensive real estate market.

Finally, you may want to finance your new home with SoFi because, well, it’s not a gigantic heavily collateralized bank. SoFi stands for “social finance” because the investors in their loans— whether student loan refinancing, a personal loan or a new home—invest directly with SoFi, which in turn lends the money directly to you.

Is SoFi a fresh way of doing things, or just the way getting a loan should’ve worked all along? I don’t know. But for successful young adults looking for an easier way to buy a home, it’s likely a refreshing change.

Learn more about the SoFI mortgage or see if you qualify here.

All rates, member figures, estimates, terms, state availability, and savings calculations are current at the time this article was written. All of the above may update in the future. For the most up-to-date information, visit

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