SoFi Mortgage Review: Ideal for Nontraditional Buyers

SoFi's low down payments, low fees and alternative methods of assessing borrower credit make it an ideal option for younger first-time home buyers.

Editor's Rating

4.5

Good for

  • Alternative credit assessment is more tolerant of limited credit history and high debt-to-income ratio
  • Well-developed web interface for submitting and tracking loan application
  • Additional resources and products such as student loan refinancing

Bad for

  • Online-only loan process may be unfamiliar to some
  • Educational/professional criteria can be difficult for some applicants

SoFi Mortgage Review: Ideal for Nontraditional Buyers

SoFi's low down payments, low fees and alternative methods of assessing borrower credit make it an ideal option for younger first-time home buyers.

Good for

  • Alternative credit assessment is more tolerant of limited credit history and high debt-to-income ratio
  • Well-developed web interface for submitting and tracking loan application
  • Additional resources and products such as student loan refinancing

Bad for

  • Online-only loan process may be unfamiliar to some
  • Educational/professional criteria can be difficult for some applicants

Editor's Rating

4.5

SoFi Mortgage Review: Ideal for Nontraditional Buyers

Editor's Rating

4.5

Good for

  • Alternative credit assessment is more tolerant of limited credit history and high debt-to-income ratio
  • Well-developed web interface for submitting and tracking loan application
  • Additional resources and products such as student loan refinancing

Bad for

  • Online-only loan process may be unfamiliar to some
  • Educational/professional criteria can be difficult for some applicants
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SoFi is an attractive option for consumers whose high debt-to-income ratios make them less likely to get approval from traditional mortgage lenders. If you have low savings or high debt but can prove that you earn a stable income, SoFi's novel underwriting methods may help you buy a home in situations where your bank might turn you down. SoFi allows lower down payments, and doesn't charge for originations or mortgage insurance, which further boosts its value for new homebuyers as a source of low-cost home loans.

SoFi: Lower Down Payments, Fewer Costs

We'd recommend people with stable incomes but high debt-to-income ratios consider getting a mortgage quote from SoFi. The company's unconventional approach to mortgage lending is best defined by what it doesn't do. It charges no origination fee, and it doesn't require any borrower paid mortgage insurance —even if you fall below the usual minimum down payment of 20%. Finally, SoFi's underwriting standards are more lenient towards applicants with large amounts of student debt. All these factors make it a surprisingly accessible choice for younger people who think they aren't financially capable of getting approved by standard mortgage lenders.

However, SoFi's new approach to mortgage lending doesn't make it a perfect fit for every borrower. With no physical locations, SoFi doesn't offer the kind of in-person consulting and guidance that many borrowers might want as a fallback if things get complicated. And while the company is generous about down payments and your debt to income ratio, it looks at plenty of other financial indicators before it will approve you for a mortgage.

These include not only the typical credit score but also free cash flow, professional history and educational background. We couldn't find requirements on these three factors, but SoFi's student loan refinancing requirements may give you an idea of what the company typically asks for: you must be employed or have a job offer to start within 90 days, and you have an associates' degree or higher from a Title IV school. Similar conditions apply to SoFi's other products, including personal loans.

How Do SoFi Mortgages Compare?

Comparing the mortgage rates and fees of brick-and-mortar bank lenders only provides a limited glimpse of the real differences between SoFi and the traditional mortgage industry. SoFi's main draw is the idea that it will approve borrowers whose financial situations are portrayed as overly risky by traditional underwriting practices.

30-Year Fixed Rate Mortgage Estimates at Major Banks

SoFiChaseBank of AmericaWells Fargo
Interest Rate4.63%4.00%3.75%4.00%
APR4.63%4.26%4.14%4.23%
Discount Points--0.250.89-
Monthly Payment$916$851$892$912
Origination Fee-$595$1,185$995

SoFi mortgage products aren't nearly as varied as those at major brick-and-mortar banks, with just three different options: 30-year fixed, 15-year fixed and 7/1 ARM adjustable rate mortgages. It doesn't participate in any non-conventional mortgage programs like FHA loans or VA loans, which eliminates SoFi as an option if you're interested in those government-sponsored loans. Specifically, you won't be able to obtain anything close to the FHA program's 3% down payment at SoFi, which asks for a minimum of 10%.

With no origination fee at SoFi, you'll have more cash available to spend on your down payment or on buying down your mortgage rate. Moreover, the reduced down payment requirement goes even further in helping you afford a larger purchase. SoFi's unique application process asks you to submit information about your education and career history, then factors these data into the approval decision. This means that even if you have student loans or other large debt, your professional profile may justify your situation and improve your chances of getting approved for a mortgage.

Customer Service and Mortgage Servicing

SoFi began originating home loans in 2014, so there isn't much data on its history of consumer satisfaction. The company wasn't included as part of JD Power's 2017 survey of customer satisfaction among mortgage lenders, and SoFi customers have lodged just 4 complaints in the three years since it began servicing mortgage loans.

Mortgage-Related Complaints at Major Banks, 2013-2017

CompanyMortgage OriginationsCFPB ComplaintsRatio2017 JD Power Rating
SoFi2,29740.17%-
Chase948,00014,7781.56%764
Wells Fargo2,155,22225,1821.17%745
Bank of America1,172,11328,1872.40%767

While it's still too early to draw any conclusions from what little data there are, SoFi has yet to commit any major public errors affecting customer satisfaction. As a general note, we anticipate that people who are comfortable managing their finances through online tools will have little issue with SoFi's web services. On the other hand, traditionally-minded consumers may take issue with the company's lack of in-person services, since SoFi doesn't maintain any physical branches in the US.

Mortgage Loan Products at SoFi

To understand the effect of mortgage discount points on SoFi's various mortgage products, we asked the site for fixed mortgage rates with different amounts of purchased points. We relied on a purchase price of $198,000 and 10% in down payment —the minimum payment advertised by SoFi.

30-Year Fixed Mortgages at SoFi

Interest RateAPRCost of Points30-Year SavingsMonthly Payment
4.63%4.63%--$916
4.50%4.55%$1,114$3,670$903
4.38%4.48%$2,228$7,301$890
4.25%4.40%$3,119$11,123$877

While SoFi's interest rates run fairly high, they can be bought down with mortgage points that will reduce your monthly costs throughout the loan term. In addition, the absence of a loan origination fee at SoFi means that you'll have more cash available to spend on the purchase of points. This makes it more likely that you'll be able to afford a lower mortgage rate if you plan on sticking with the mortgage for the long term. SoFi also offers 15-year mortgages for people who want to build equity more quickly, with similar conditions for buying points.

15-Year Fixed Mortgages at SoFi

Interest RateAPRCost of Points15-Year SavingsMonthly Payment
4.00%4.00%--$1,318
3.88%3.91%$446$1,557$1,307
3.75%3.84%$1,114$2,884$1,296
3.63%3.77%$1,782$4,199$1,285

Where Can You Get a Mortgage With SoFi?

SoFi is licensed to originate mortgages in 42 states and Washington DC. Its online platform makes it a valid choice for anyone residing in those areas. So far, though, more than half of its home loans have been located in California, where SoFi is based. If you live elsewhere, keep in mind that you may be one of SoFi's earliest mortgage customers. Still, you should be able to apply for a mortgage so long as you're not buying or refinancing in the following places.

States Without SoFi Mortgage Availability

  • Hawaii
  • Massachusetts
  • Missouri
  • Nevada
  • Ohio
  • South Carolina
  • Virginia
  • West Virginia

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