If you’re on TikTok or Reddit, it’s likely you’ve come across a tenacious rumor: That it’s better to invest in life insurance than a 401(k) for retirement. So, is it true?
Life insurance vs. 401(k)
Life insurance isn’t an investment, while a 401(k) is a type of investment account offered through your employer. Permanent life insurance (which offers lifelong coverage) isn’t an investment, and its exorbitant fees erode the money you pay into your policy and any earnings you might make for the first decade.
“It was very strange to me that there were so many life insurance salespeople all over TikTok, basically soapboxing about life insurance, like it was the next big thing like it was the most amazing investment on Earth,” says Vivian Tu, founder of Your Rich Bff, a TikTok channel that focuses on financial education, based in Miami Beach, Florida.
Can life insurance grow like an investment account?
In some cases, yes. There are some types of life insurance, such as whole life insurance or universal life insurance, that have the ability to increase in cash value. But how do some of those policies earn money like an investment return? By tracking market indexes.
One of the features touted by TikTok influencers is that returns made on insurance policies aren’t affected by the overall stock market, but that isn’t necessarily true. The insurance companies may invest in the stock market with part of their portfolio, which is technically a portion of a policy owner’s premium. Though some policies provide fixed returns, some depend on current interest rates and investments. Some policies have you pick the stock or bond indexes for your policy to mirror, such as the S&P 500, and the insurance company pays you interest based on how those indexes perform.
Life insurance vs. 401(k): Fees
If life insurance can earn stock market interest in a way similar to that of a 401(k), what’s the issue?
The issue is that, depending on the policy, the staggering fees insurance policies charge often wipe out the amount you would get back from those premiums and any investment returns.
For example, if you pay the premium for seven to 10 years, most of those premiums go toward the cost of providing that insurance. In addition, there are administrative fees and the agent’s commission, though you may not see a commission listed on a statement and it may be difficult to figure out exactly how much those commissions are. Those commissions aren’t a one-time payment: You may continue to pay them for seven to 10 years, or as long as the policy is active.
The premiums you pay that cover fees don’t sit in an account waiting for you to cash them in. If you pay into a 401(k) for a decade, you get to keep all that money less any fees and investment losses. With an insurance product, it’s only after a decade (again, depending on your policy) of monthly payments that you actually start accruing premium money and interest in a cash value account the insurance company holds for you.
That interest percentage is less than you can get in a high-yield savings account and far less than the stock market’s long-term average of 10% (not accounting for inflation).
Insurance policies also have significant surrender charges, which are fees you have to pay if you withdraw money from your policy early. These charges are often so large that they can dramatically reduce the net value of your policy until the first few years pass.
For example, if you wanted to take money out of your policy after the first two years, your surrender charge would likely be so high that there would be little to no money to take out. These charges eventually reduce to zero, but it can take 10 to 16 years.
While 401(k)s do charge a 10% penalty if you want to take money out of your account before you’re 59½, that 10% is likely to be far less than a surrender charge. Plus, there are lots of exceptions to the 401(k)’s 10% penalty, including disabilities, the birth of a child, medical expenses and emergency personal expenses.
If you were to invest in the stock market through a 401(k), you wouldn’t lose 10 years’ worth of investment dollars to the cost of insurance, and your management fee would likely be less than 1%.
“The idea that 401(k) fees are higher than an insurance product that would be serving as an investment, I don’t even know how you support that idea,” says Georgia Lee Hussey, a certified financial planner and founder of Modernist Financial, a wealth management firm in Portland, Oregon.
Insurance fees are complex
In addition to paying commissions and exceptionally high fees, you may not even know how much you’re paying because insurance fee structures are so complicated.
“Whole life policies are basically called the black box of insurance policies. You can’t really see what’s happening inside them,” Hussey says. “You can understand the internal expense ratio sometimes but you usually have to go deep into the disclosure documents to understand what the insurance company is really getting paid.”
If you purchase insurance through an agent or broker (or a TikTok influencer), it’s possible that that person will be making a commission, and that’s on you to figure out.
“When you actually look into it, you realize that all of these people are, in fact, life insurance brokers. They don’t even work at life insurance companies that provide the policies,” Tu says. “The vast majority of them are not fiduciaries, so they are not legally obligated to do right by you financially.”
On the topic of using insurance to invest, it’s good to remember two cardinal rules of investing: If it sounds too good to be true, it probably is. And if you can’t explain it clearly to a friend, you probably don’t understand it, which could be a sign to steer clear.
As Tu says: “It’s insurance. It’s not an investment.”
Do you want to learn how to start a print-on-demand business? Print-on-demand businesses allow you to create and sell custom products like t-shirts, mugs, and phone cases without needing to store any inventory. Today, I have a great interview to share with you all about this business idea. It’s with Jessica Roop, who has had…
Do you want to learn how to start a print-on-demand business?
Print-on-demand businesses allow you to create and sell custom products like t-shirts, mugs, and phone cases without needing to store any inventory.
Today, I have a great interview to share with you all about this business idea.
It’s with Jessica Roop, who has had a print-on-demand side hustle for a couple of years. She’s been designing and selling her own products, and she recently launched a course on the subject I Love Print on Demand.
She profits around $500 and $1,500 per month with her print-on-demand side hustle. She has made over 6,000 print-on-demand product sales too!
In this interview, I ask Jessica questions about how to start a print-on-demand business from home.
So, if you are interested in starting a flexible and in-demand side hustle, I ask her questions you may be wondering about, like:
What is print-on-demand? How does print-on-demand work?
What are print-on-demand items a person can sell?
How much can a new person make selling print-on-demand?
How much does it cost to start and run a print-on-demand business?
Can someone with no tech skills start a print-on-demand business?
Today’s interview will help you get started on your path to becoming a successful print-on-demand entrepreneur.
I recommend signing up for the freebie 17 Hot-Selling Print-on-Demand Products That Can Pay for Your Next Vacation and More! to learn more.
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This freebie will teach you about print-on-demand as well as give you a list of 17 hot-selling products you can sell via print on demand.
How To Start a Print-On-Demand Business
Below is the interview all about how to start a print-on-demand business.
1. Please give us a little background on yourself and how you got started with a print-on-demand business. How much do you earn monthly from print-on-demand?
Hi! I’m Jessica. I’ve worked full-time online since 2017, doing everything from food blogging to offering virtual assistant services.
In 2020, like many of us, I found myself with some extra time on my hands because of COVID. In my free time, I became a little obsessed with how well e-commerce was doing, so I decided it would be a good side hustle to pursue. In 2021, I started planning my e-commerce business with an early 2022 launch. I was so excited!
I wish I could say that this was the beginning of my print-on-demand journey, but unfortunately, I dove into e-commerce the hard way: I started an online gift company that carried physical inventory.
Seeing as I live in a 692-square-foot apartment, this did not turn out to be a great idea. Plus, I completely underestimated how long it would take to pull products, package them, print shipping labels, and take boxes to the post office. It was exhausting, and my fun little e-commerce “side hustle” became a nightmare.
One day, print-on-demand randomly popped into my head, probably out of complete desperation!
A few years prior, I had created a few print-on-demand products after hearing about the idea somewhere. I never took selling the products I designed seriously, but the idea suddenly sounded intriguing. It would solve all of my problems because I wouldn’t have to carry any inventory and wouldn’t have to pack, package, or ship anything.
I launched my first print-on-demand product on Etsy in May 2022 and quickly had a best-selling product on my hands. I was hooked and haven’t looked back since!
My profit averages between $500 and $1,500 per month. I’m pretty busy with my “day job” income streams, so print-on-demand has always been a side hustle for me. It’s a super fun creative outlet and a great way to generate extra cash every month.
2. What is print-on-demand? How does print-on-demand work?
At its core, print-on-demand means that products are produced “on demand,” meaning they aren’t produced until an order comes through. For example, a design isn’t printed on a blank mug until a customer orders it.
Print-on-demand has evolved into a term for a business model where regular people can team up with a print-on-demand production partner and sell a wide variety of products without ever holding physical inventory or doing any of the fulfillment.
Let’s say you sell on Etsy like I do. Here’s how the process would look for you:
You create a digital design file (much easier than it sounds; some of my best sellers are text-only designs!) and upload it to your production partner’s site; in this example, let’s say you’ve designed a t-shirt
You list your t-shirt for sale on Etsy
A buyer finds your t-shirt, loves it, and purchases it
The order is sent to your production partner, and you click a button to confirm the order
Your production partner prints your digital design file on a t-shirt in the customer’s preferred size, packages it, prints a shipping label, and sends it off to your customer
Your production partner uploads the tracking information to Etsy and marks the order as complete
That’s it! Etsy pays you (minus transaction fees), and you pay your production partner. You pocket the difference, typically about 30% of the price you listed it for on Etsy. Your customer pays 100% of the shipping costs.
As you can see, at no point during this process do you hold a physical item in your hands. Your production partner takes care of all of it for you.
Here’s a print-on-demand product example.
3. What are print-on-demand items a person can sell?
Pretty much anything! Although I don’t have any exact figures, I’d say there are thousands of different products available for print-on-demand.
Every production partner offers something different, and the vast majority of production partners are adding new products all the time. And within each product category, there are often many different variations. For example, there isn’t just one type of mug out there – there are different sizes, different shapes, different colors, different materials.
Here are just a few of the products available for print-on-demand:
Mugs
Tumblers
T-shirts
Sweatshirts
Tote bags
Makeup bags
Wall art
Blankets
Desk mats
Cell phone cases
Ornaments
Bumper stickers
Jigsaw puzzles
Pet bowls
Can coolers
If you can dream it, it’s probably available!
4. How much can a new person make selling print-on-demand?
As long as you dedicate yourself to the process, making ~$500/month in profit on Etsy within the first 3-6 months is possible.
I started making that amount only about a month in, but I was lucky to have a best-selling product very quickly. That wasn’t my intention (I was just excited to get a single sale!), but I just happened to release a product that really spoke to people.
After that initial start-up period, for a part-time effort on Etsy, $500 to $1,500 a month in profit is totally doable. For a full-time effort on Etsy, $40,000 to $70,000 a year in profit is achievable.
You probably noticed that I’m saying on Etsy. If you create your own store (Shopify is a popular platform for self-hosting) and start doing a lot of paid ads and/or social media, you can scale a lot higher. There are people making multi-six figures a year in profit!
5. How much does it cost to start and run a print-on-demand business?
If you’re starting your shop on Etsy like I did, here is a general overview of costs:
Etsy (sales platform): $0.20 per new item listing, plus transaction fees of 6.5% after you make a sale
Creative Fabrica (to source fonts and images to use on designs): $3.99/month
Printify (production partner): No subscription fee, although they do offer a Premium plan for $24.99/month that allows you to purchase the products cheaper (highly recommended if you start making more than ten sales a month)
*Some people use Canva, but I’ve found that Adobe Illustrator makes it easier to produce quality designs. That said, Canva is making improvements all the time, so switching over will hopefully be possible eventually!
6. What do you like about print-on-demand? Is it worth it?
I like to joke that I’m a mix of highly motivated and highly lazy, and I’ve found that print-on-demand, especially on Etsy, is perfect for someone like me!
I love that I can publish as many product designs as I want with minimal effort and minimal risk. If something doesn’t work out, it’s no big deal… I can just move on to the next product. After seeing the other side of things with an inventory-based business, print-on-demand is so easy and super low-stress.
I’ve also come to really love the creative process of designing new products. I’ve spent my whole life feeling like I’m not creative, but print-on-demand has ignited a creative flame in me that I didn’t know existed. My designs are pretty basic, but sometimes I’ll spend hours designing products without even realizing time is passing.
It’s 110% worth it. It’s such a fun hobby – one that makes me money! Print-on-demand is a great way to fund vacations, home improvements, “me time” things (like time at the spa), and to pay off bills. Plus, if taking it full-time is your goal, that’s doable as well.
7. How does a person get customers for print-on-demand?
I highly recommend starting with Etsy because they have a built-in customer base. Etsy has about 92 million active buyers globally, so the potential is enormous! People don’t go to Etsy for any other reason than to purchase something, so you can be laser-focused on acquiring customers.
Like many online platforms, Etsy heavily relies on SEO for listings, so as long as you optimize your listings for their search engine, they can be found by potential buyers.
Etsy is the “easy button” for print-on-demand customers, but there are other ways to get customers, namely organic social media and paid social media (ads). For these methods, instead of hosting your products on Etsy, you would likely have your own online store through platforms like Shopify, Wix, Woocommerce, etc.
TikTok Shops are also becoming popular ways for print-on-demand sellers to reach customers. With a TikTok Shop, you sell directly on the app, and customers can purchase directly on the app, so you don’t need to have a separate store somewhere.
TikTok has strict rules for selling through its shops, including the maximum number of days that can pass before the product is shipped to the customer. This used to be a barrier to entry for print-on-demand since some products can take a little while to be fulfilled (because they need to be printed before they’re shipped), but now more production partners are making sure their products are shipped within TikTok’s timelines.
8. Can someone with no tech skills do this?
Yes! You don’t have to be super tech-savvy to start; you just have to be open to learning new skills. People of all tech levels can be successful with print-on-demand.
Even when it comes to graphic design, you don’t have to be skilled. As I mentioned before, some of my best-selling designs are text-only! Plus, with an inexpensive subscription to a place like Creative Fabrica, you can source millions of images and fonts to use in your designs.
9. Which is the best print-on-demand platform?
I use Printify and love it.
The two biggest players in print-on-demand are Printify and Printful, and I decided to go with Printify because I preferred their pricing structure and product selection. They have been fantastic and I have zero regrets!
10. Can you list the steps needed to get started selling print-on-demand?
If you choose to go the Etsy route, here’s what you need to do:
Set up a Printify account
Sign up for Creative Fabrica or a similar site to source fonts and images
Choose a product or two to start with on Printify (mugs are always a good choice) and download the design templates
Download Adobe Illustrator, open the design templates, and start designing
Upload your designs to Printify
Open an Etsy account and connect Printify to Etsy
Upload your products to Etsy
Start selling!
This is just a general overview, of course. There are other important pieces of the puzzle like researching niches, choosing from different design styles, and crafting your Etsy listings in the right way so they show up in Etsy results.
11. Can you tell me more about the course you have?
I Love Print on Demand is the course I wish I had when I started my print-on-demand journey.
With it, you will set up your print-on-demand business for success from day one so you can skip the stress and start making money faster!
I honestly had no clue what I was doing when I started, and it’s a total miracle I figured out the eight steps listed above, let alone any of the other moving pieces and parts. It was a slow learning process for me, and I made a lot of mistakes at the beginning, which was a pretty stressful experience.
When I created my course, I thought about all of the questions I had and all of the things that slowed me down and then created a course that addressed all of those aspects.
I also made sure to keep it simple by narrowing the focus to the top three products that sell best for me. Print-on-demand can be a little like the Cheesecake Factory menu—there are so many product options, and you can easily get overwhelmed! It’s okay to branch out to other products later, but I keep you laser-focused so you focus on what works right from the beginning.
If you’re interested, you can check out my I Love Print on Demand course here.
You can also sign up for my free ebook, 17 Hot-Selling Print-on-Demand Products That Can Pay for Your Next Vacation and More!, here.
Do you want to learn how to start a print-on-demand business? What would you sell?
Note from Making Sense of Cents: I hope you enjoyed this helpful article on how to start your own POD business. There are many marketplace and ecommerce platforms (your supplier who does your order fulfillment) that you can get started with, as you learned above. And, there are many unique designs that you can sell to stand apart from the crowd. I have bought many items (a wide range of products such as apparel, accessories, and home decor) from POD businesses over the years, and I expect this to continue for myself and many others for the future. There are many ways to grow a print-on-demand business too (such as Facebook, Instagram, and even YouTube), so that can help you to make more money and maybe even increase your profit margins. I hope you see lots of success!
Despite the prevalence of TikTok videos and recent articles detailing stories of individual college graduates struggling to find good jobs, the data tells a different story.
After all, the overall labor market is stronger than it’s been in decades. And Zoomers who recently graduated from college are certainly better off, in most respects, than previous generations of new grads.
“If you’re a recent college grad, right now things aren’t booming with opportunities like they were a couple years ago,” says Nick Bunker, economic research director for North America at Indeed Hiring Lab. “But it’s still really a relatively solid labor market. And hopefully, fingers crossed, the market stays strong for a couple years. And that gives you more opportunity to find a job as opposed to hanging your hat for the first six months after you graduate.”
When you compare the labor markets faced by Zoomers with previous generations, recent college grads now are better off than their older counterparts: Zoomer grads are earning much higher salaries today than Gen X did in the mid-1990s. Inflation may eat away at Gen Z’s high wages, but it doesn’t touch the stagflation of the 1970s and 1980s that baby boomer college graduates encountered.
The short recession that Gen Z experienced at the start of the pandemic is certainly no Great Recession, which technically lasted less than two years, but was followed by several years of tepid economic growth. That period stymied recent millennial graduates during crucial early employment years and is likely to negatively impact their lifetime earnings.
“It’s not just the year that you graduate,” says Bunker. “Your first years out probably make the most difference because that’s when you’re getting your foot on the career ladder.”
Gen Z bounced back fast
Despite the fact that the oldest cohort of Zoomers — 2020 grads — entered a job market with the highest unemployment rate in the modern era, that recession lasted just two months. And what followed was one of the strongest economic bounce backs ever.
The nation’s unemployment rate has hovered between 3.4% and 4% since December 2021. The current rate, 4.1%, remains among the lowest in 50 years, which means Zoomer college graduates have strong prospects for getting jobs right out of school and moving up the career ladder.
Bunker says the job market has cooled compared with two years ago. There is far less competition among employers than in 2022, which means fewer opportunities, according to Bunker. But it’s not all that dramatic in the broader context.
“If we wind the clock a little bit more and compare to what we saw pre-pandemic, it’s around those levels,” Bunker says. He adds that when compared with previous cohorts of graduates, job opportunities are roughly in line with those enjoyed by millennials who completed college in the early 2000s.
Gen Z’s unemployment outlier
Even with all of the positive aspects of the current labor market, there’s still a unique trend among recent Gen Z graduates that earlier generations haven’t faced: an unemployment rate that’s higher than overall unemployment.
It’s a particular quirk seen when you parse unemployment data among recent graduates over the past 30 years. The unemployment rate as of March 2024 for recent graduates was 4.7% — a full percentage point higher than the overall unemployment rate at that time, 3.7%.
This is an unusual development. Before 2018, the unemployment rate among recent grads was almost always lower than overall unemployment, due to strong employer demand for highly educated workers.
The reversal is likely because there’s been a surge in demand for non-college-educated service workers since the pandemic.
Underemployment is still high among recent grads
Labor data shows that underemployment — the rate of those with college degrees who are working jobs that don’t require degrees — has always been higher among recent graduates compared with all bachelor’s degree holders.
“They go ahead and get that college degree and then they can’t get on a career track that uses that education,” says Elise Gould, senior economist at the Economic Policy Institute (EPI), a nonpartisan think tank.
It doesn’t help that certain job sectors have become more crowded. Majoring in computer science, for example, doesn’t guarantee a job anymore as tech companies pull back from hiring.
Underemployment among computer science majors is higher than those who study health-related programs, education or engineering, according to a February 2024 report by The Burning Glass Institute, a labor market analytics firm, and Strada Education Foundation. But fewer computer science majors are underemployed when compared with those who study social sciences, psychology, humanities and business management.
As of March 2024, some 40% of recent graduates are working in jobs that don’t require a degree versus 33% of all college graduates, according to data from the Federal Reserve Bank of New York.
Salaries for recent grads have spiked
Gen Z college graduates can expect higher-than-ever salaries when they enter the job market: The typical recent college graduate with a four-year degree can anticipate a salary of around $62,609, according to an analysis of employer job postings and third-party data sources by ZipRecruiter, a job posting site. That roughly matches the Federal Reserve Bank of New York’s finding of $60,000 as the median annual wage for a recent graduate with a bachelor’s degree.
As the chart below shows, current median salaries are above those held by earlier generations of newly minted graduates when adjusted for inflation.
Even though salaries are at a peak for recent grads, the latest cohort might not be earning what they expect: A survey released by Real Estate Witch, a housing market research and review site, found 2023 graduates expected to make around $85,000 at their first job and the minimum salary they said they would accept is around $73,000. However, Real Estate Witch found that the average starting salary for a recent grad is about $56,000.
“If you’re a young person graduating now, maybe the differential between what you expected and what reality is, is quite large,” says Bunker.
It’s also possible that wage growth for young new hires may have plateaued as the momentum in the overall labor market that was pushing wages higher has now slowed, says Liv Wang, senior data scientist at ADP Research Institute, which measures workforce data. “If we look at ages from 23 to 26 — that includes a lot of recent grads — and the median hourly base pay for them is like $17, and that per-hour has been little changed since June 2022,” says Wang, citing recent ADP data.
Still, as Gould points out, young workers are disproportionately lower-wage workers — even if they have a college degree.
Jobs for New Grads: How Does Gen Z Stack Up Against X and Y?
Find out what the overall labor market was like when cohorts from Generation X and Generation Y (aka millennials) entered the workforce after college compared with today’s graduates. Read more.
Gen Z grads do face economic and employment uncertainty
Today’s college graduates heading into the workforce aren’t free from economic challenges. They’re dealing with elevated inflation that eats away at their wages. And when you earn less — as most young workers do — higher costs take a bigger bite. In recent years, the cost of housing has skyrocketed, especially for renters, while health insurance and car ownership have both grown more expensive. And, Gould says, like generations before, young workers fresh out of college who have student loan debt will carry an additional burden.
Salaries, overall, may be higher than ever, but it varies based on your degree. And there are still persistent gender and racial inequities to earnings, Gould points out.
But once again, the data shows it is still a pretty good time to be a college graduate and, in general, to have a degree.
It still pays to get a college degree
Those with college degrees remain more likely to be employed than workers in the same age group, ages 22 to 27, according to an analysis of U.S. Census Bureau data from the Federal Reserve Bank of New York. Even an associate degree or professional certificate can give young workers a leg up, as many areas of the country are facing a shortage of middle-skills labor.
In March 2024 the unemployment rate for recent college grads — those ages 22 to 27 — was 4.7% compared with 6.2% for all young workers in the same age group.
(Photo by Nic Antaya/Getty Images News via Getty Images)
Journeying to a new place lets you try on what living in another culture feels and looks like, whether you’re exploring the adobe house-filled streets of Santa Fe or the lantern-lit alleys of an ancient Moroccan city. Many travelers, dazzled by the rug sellers of Istanbul or the pottery workshops of Oaxaca, return with worldly housewares or art to decorate their homes.
“A textile, a clay bowl or an object you pick up at a flea market connects you to a time that you’ve enjoyed, a memory of a place,” says Hilary Robertson, a Brooklyn prop stylist and author of “Nomad At Home: Designing the Home More Traveled.” “If you can’t move to Marrakech or Kyoto, you can at least recreate something of the feeling.”
But snapping up the best items for your particular home requires a bit of strategy and advance planning. Here’s how to shop smartly, how to get your treasures back in one piece, and what to do with them upon your return.
Do your homework
You usually won’t turn up Indigenous handicrafts or interesting local art at an airport store or the hotel gift shop. “So do research before you go, looking up artisan networks, finding out which days flea markets operate, and figuring out what you might even be able to buy in a given place,” says Rachna Sachasinh, owner of Tikkiwallah, an online shop selling fair-trade Thai and Laotian pillow covers, blankets and other textiles.
Seek tips on what to buy and where to shop from your hotel concierge (or short-term rental owner), and via the websites and social media accounts of official tourism boards. You can also flip through old-school guidebooks (Lonely Planet, Rick Steves), which tend to concentrate on local retailers, rather than the location of every West Elm in Mexico City. TikTok and Instagram also offer potential shopping info, but be wary of paid brand placements.
While cool art and vintage home decor are available at most destinations, “you’ll find more handmade items like textiles, rugs and baskets if you travel to places like Morocco, India and Mexico, which still have living crafts cultures,” says Sachasinh.
Consider hiring a shopping pro
To get straight to the treasure hunting, you could hire a tour guide who specializes in shopping for a few hours. Look for market- or retail-specific experiences in your destination on travel booking sites such as TripAdvisor and Tours by Locals; using the name of a specific place (“Istanbul Grand Bazaar” or “Oaxaca pottery workshops”) can further winnow your search.
You can also try a simple online search to turn up market-savvy private guides such as Buenos Aires Shop Hop (guided jaunts to leather workshops and vintage markets in Argentina) or Maryam Montague, the proprietor of Peacock Pavilions hotel in Marrakech, who takes travelers on daylong expeditions through the city’s souks looking for fuzzy tribal rugs, bright pottery and leather poufs.
Or go on a crafts- or shopping-focused trip. Tour companies such as Ace Camps and Thread Caravan host weeklong trips to meet artisans and make things alongside them in destinations such as Perú (try weaving in the Sacred Valley near Machu Picchu) or Japan (learn how to use shibori indigo dyes or make pottery).
Luxury trip-planning company Indagare offers frequent style-centric small group tours to Mallorca, Rajasthan and Paris with dinners in designers’ homes, market excursions and meetups with artists. Grant K. Gibson, an interior designer, leads small groups to destinations such as Jaipur, India, and Oaxaca, Mexico, where they visit showrooms, learn about block printing and woodworking techniques, and usually come back with suitcases full of merchandise.
“Design touches on so many passion points — art, history and culture, food and wine — that trips like these are a great linchpin for learning, exploration and meeting fellow design enthusiasts,” says Indagare founder and chief executive Melissa Bradley.
Know what to look for
To support local artisans, look for fair-trade crafts stores, which pay creators fairly for their products and tend to stock goods representative of a destination. Other top bets: flea markets focused on handmade or antique goods, museum shops, and government-sponsored artisan boutiques or networks. For instance, Artesanías de Colombia shops in Bogotá and Cartagena hawk rope hammocks and palm fiber baskets produced by Indigenous weavers.
“And visiting an artisan workshop might give the deepest connection to something handmade, since you get talk to the crafter or even make something beside them,” says Sachasinh, who recommends the weaving workshops and the blanket- and table runner-stuffed store at Ock Pop Tok in Luang Prabang, Laos. At the Seattle Glass Blowing Studio, artists create the delicate bowls and glasses the Pacific Northwest city is known for — and teach beginners how to make their own.
Think about how you’ll get it home
Serendipity and impulse inspire many souvenir purchases. But if you want a Turkish rug for your living room or a vintage Parisian painting to match your bathroom tile, be sure to travel with photos and measurements of the space you have in mind. “I always bring a measuring tape and swatches of any fabric I want to match, too,” says Montague.
Planning on carrying a lot of items home on the plane? Stash a collapsible duffel (Paravel makes a clever zip-down one) in your luggage, or, for larger purchases, pack an extra, empty hard-sided suitcase. “It’s usually cheaper to pay for an extra checked bag than to ship a lot of things home,” says Montague. Know that oil paintings can be taken off their stretchers and rolled up, and that you can purchase a throw pillow cover that takes up little luggage space and buy the bulky insert when you arrive home.
“I’m wary of checking a bag with breakables, though,” says Bradley, who has ferried glass and pottery back from Cambodia and South Africa in a hard-sided carry-on.
And whether you are two hours away by car or five time zones away by plane, retailers that sell bulky items can generally guide you toward a shipper, even though it’s often not cheap. “I had this great farmhouse dining table shipped from the Paris flea market, and I’ve had people on my trips to India send home inlaid dressers,” says Gibson.
Get creative
Many housewares bought on your travels can be repurposed, and even ordinary goods found in other countries can seem special or elevated compared to what you’d get at home. “I go to Mexican hardware stores, because even basic items like door hooks or storage bins can be so colorful and fun,” says Robertson.
A Navajo rug can serve as a tablecloth; a beaded Maasai collar morphs into a sculpture when displayed on a wire stand. Even the simplest souvenirs — a vintage postcard of Yellowstone National Park, a scrap of fabric — look terrific when nicely framed.
Grouping disparate travel finds on a gallery wall can make them seem cohesive. “I have the most random … stuff hung on the wall of the staircase at my house — a painting from India, a brass bowl I got in Turkey,” says San Francisco interior designer Chelsea Sachs. “It’s like a chronicle of my life, and these things remind me of special moments when I get back home.” Indagare’s Bradley arranges Iranian tiles, Burmese boxes and Peruvian ceramics amid the novels and art books on her shelves.
Fabrics, buttons and other easy-to-transport materials you snap up on the road can turn into home accents, even if you aren’t especially crafty. Bring home a couple pieces of washi — a Japanese mulberry paper so storied it’s recognized by UNESCO — to hot-glue onto a lampshade or inside a wooden tray. A basket or other object can be turned into a light fixture. “I carried a huge antique rattan bird cage home on a ferry from Provincetown once, and now it’s a chandelier,” says Robertson.
And almost any textile — a striped Peruvian blanket, a vintage quilt from a flea market — can be fashioned into a throw pillow or shower curtain by your drycleaner or used to reupholster a chair seat. “Sometimes stuff has to hang around for a while before you know what you’ll do with it,” says Sachs.
You might not want to amass a cabinet full of souvenir teacups, spoons or snow globes like your great grandparents did. But the concept of picking up one small object everywhere you travel still has some validity; it might save you from overbuying, and even kitschy trinkets can summon memories. Think about scoring a holiday tree ornament or small flower vase every time you go on a trip, or save a few coins from each foreign country you visit to pile into a bowl on your coffee table. “Pieces from different places become integral to your home and allow you to reconnect with a destination and its aesthetic,” says Bradley.
The homebuying process can seem confusing and overwhelming, especially since there are so many moving parts to consider.
Making a down payment is just one part of the process. While it has long been a notion that you needed to put at least 20% down in order to buy a home, findings from a National Association of Realtors report indicate that the average down payment on a home or condo in 2021 was actually 12% — for homebuyers under the age of 30, the average down payment was just 6%.
It’s important to note that if you make a down payment of less than 20%, you’ll typically be charged Private Mortgage Insurance, or PMI, until you build 20% equity in the home. That said, making a lower down payment can present some advantages. For one, doing so allows you to reserve more of your savings upfront for closing costs, lender fees, renovations that may need to be done in the home and other moving expenses.
CNBC Select rounded up five mortgage lenders that do not require a large down payment, evaluating lenders based on the types of loans offered, customer support and minimum down payment amount, among other factors (see our methodology below.) As always, do your homework ahead of time so you can be sure you’re choosing the lender that best suits your needs, whether you’re a first-time homebuyer or purchasing an investment property.
Compare offers to find the best mortgage
The best small down payment mortgages
Best for flexible down payment options
Chase Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, DreaMaker℠ loans and Jumbo loans
Terms
10 – 30 years
Credit needed
Minimum down payment
3% if moving forward with a DreaMaker℠ loan
Terms apply.
Offers first-time homebuyer assistance?
Pros
Chase DreaMaker℠ loan allows for a slightly smaller down payment at 3%
Discounts for existing Chase customers
Online support available
A number of resources available for first-time homebuyers including mortgage calculators, affordability calculator, education courses and Home Advisors
Cons
Doesn’t offer USDA loans or HELOCs
Who’s this for? Chase Bank offers down payment options as low as 3% if you apply for the DreaMaker home loan — for comparison, an FHA loan requires borrowers to make a 3.5% down payment.
While the DreaMaker loan is designed especially for those who can only afford to make a small down payment, it also comes with stricter income requirements compared to some of the other available loans. According to Chase, the annual income used to qualify customers must not exceed 80% of the Area Median Income, or AMI, for instance.
In addition to the DreaMaker loan, Chase also offers a conventional loan, FHA loan, VA loan and jumbo loan — USDA loans and home equity lines of credit, or HELOCs, are not offered by this lender. The VA loan requires a down payment minimum of 0%, which tends to be the standard rate for these types of loans. Much like other lenders, Chase has a minimum credit score requirement of 620 for its mortgage options.
Chase offers mortgage terms that range from 10 years to 30 years, as well as fixed rate and adjustable-rate mortgages, or ARM. Discounts are also offered for existing customers, although the requirements are rather high: To receive $500 off your mortgage processing fee, you’ll need to have $150,000 to $499,999 between Chase deposit accounts and Chase investment accounts, while having $500,000 or more in these accounts can result in up to $1,150 being taken off the processing fee.
Best for a VA loan
Navy Federal Credit Union
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans, adjustable-rate mortgage
Terms
10 – 30 years
Credit needed
Not disclosed but lender is flexible
Minimum down payment
0%; 5% for conventional loan option
Terms apply.
Pros
0% downpayment for most loan options
flexible repayment terms ranging from 10 years to 30 years
Offers refinancing, second-home financing and loans for investment properties
No PMI required
Fast pre-approval
RealtyPlus program allows applicants to receive up to $9,000 cash back
Cons
Must be a Navy Federal Credit Union member to apply
Who’s this for? Navy Federal Credit Union provides the most benefits to current or retired members of the Armed Forces who have signed up for a Navy Federal Credit Union membership (immediate family members are also eligible).
This lender offers VA loans with the option to pay 0% down and contribute up to 4% of the home’s value toward closing costs. Another option, the Military Choice mortgage, has similar guidelines to the VA loan, such as no PMI and a 0% minimum down payment, but allows sellers to contribute up to 6% of the home’s value toward closing costs.
Homebuyers can also use the RealtyPlus program to buy a home and receive up to $9,000 in cash back. Private mortgage insurance, or PMI, is also not a requirement for a low down payment on a mortgage through this particular lender.
While this lender doesn’t disclose its required minimum credit score, it does work with members to analyze their circumstances and find the right mortgage fit for them, making Navy Federal Credit Union a potentially more flexible lender if your credit score is on the lower side.
Best for no lender fees
Ally Home
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, HomeReady loan and Jumbo loans
Terms
15 – 30 years
Credit needed
Minimum down payment
3% if moving forward with a HomeReady loan
Terms apply.
Pros
No lender fees
Preapproval in as little as three minutes
Available in all 50 states
HomeReady loan only requires a 3% down payment
Cons
No FHA, USDA or VA loans
No home equity line of credit (HELOC) loans
No physical branches
Who’s this for? Ally Bank offers a HomeReady mortgage program that is geared toward low- to mid-income homebuyers regardless of whether it’s their first time or if they’re a repeat buyer, allowing you to put down as little as 3% for a down payment. Applicants must have a debt-to-income ratio of no more than 50%, their income must be equal to or less than 80% of the area’s median income and at least one borrower must take a homeowner education course.
It’s common for lenders to charge several fees during the mortgage application process, including an application fee, an origination fee, a processing fee and an underwriting fee, which can end up costing a significant amount during the homebuying process. While Ally doesn’t charge any of those fees, you may still have to deal with appraisal fees and recording fees, or pay for title searches and insurance.
It’s possible to get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes, as long as you have all the necessary documents handy.
While Ally also offers a jumbo loan option, note that FHA loans, VA and USDA loans are not available through this lender. Customers can also choose between fixed rate and adjustable rate mortgages, and 15-year, 20-year and 30-year loan terms.
Best for specialized loan options
PNC Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms
10 – 30 years
Credit needed
Minimum down payment
0% if moving forward with a USDA loan
Terms apply.
Pros
Offers a wide variety of loans to suit an array of customer needs
Available in all 50 states
Online and in-person service available
Cons
Doesn’t offer home renovation loans
Who’s this for? USDA loans allow homebuyers to make a 0% down payment to purchase their home. It’s sometimes tough to find lenders that offer these types of loans in addition to other standard mortgage options, but PNC Bank does include USDA loans in its lineup.
To apply for a USDA loan with PNC Bank, you must be purchasing a home in a qualifying rural area. If you’re not interested in a USDA loan, this particular lender also offers conventional loans, FHA loans, VA loans, jumbo loans and a PNC Bank Community Loan, a special program that allows homebuyers to put down as little as 3% (without paying private mortgage insurance) and choose between fixed-rate and adjustable-rate mortgage terms.
This lender also offers a special loan option geared toward medical professionals who are looking to buy a primary residence only. With this loan, medical professionals can apply for as much as $1 million and won’t have to pay private mortgage insurance regardless of their down payment amount. They can also choose between fixed-rate and adjustable-rate terms.
It’s possible to get online pre-approval in as little as 30 minutes as long as you have all the documentation available on hand.
Best for no PMI
Citibank Mortgage Account
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and Jumbo loans
Terms
15 – 30 years
Credit needed
Minimum down payment
Terms apply.
Pros
Citi’s HomeRun Mortgage program allows for a downpayment as low as 3%
Citi’s Lender Assistance program gives eligible homebuyers a credit of up to $5,000 to use toward closing costs
Ability to choose between fixed-rate and adjustable-rate mortgages
New and existing Citi bank customers can qualify for closing cost discounts based on their account balance
HomeRun mortgage program allows for a downpayment of less than 20% without PMI
Provides homeownership education and counseling
Cons
No options for a 0% downpayment
Existing customers need high account balances to receive some of the highest interest rate discounts
Who’s this for? Private Mortgage Insurance, or PMI, is typically a required monthly charge if you make a down payment of less than 20% for your home. While it can eventually be waived once you’ve made enough payments to build up 20% equity in your home, PMI can still easily eat into your monthly budget before that point.
Those who apply for a mortgage through Citi’s HomeRun program can make down payments as low as 3% without having to pay monthly PMI. HomeRun mortgages also allow you to lock in a fixed rate on your loan so you won’t have to worry about potentially being charged even more interest down the line. This mortgage option is also ideal for those who need to borrow up to $726,200 — or up to $1,089,300 if you reside in Hawaii or Alaska. If you’re looking for a jumbo loan, here are four mortgage lenders you should consider.
Aside from the HomeRun program, Citi also offers discounts for anyone interested in its other mortgage loans. Citi is currently offering a $500 credit toward your closing costs when you apply for a Citibank Mortgage Account.
FAQs
What is pre-approval and how does it work?
Pre-approval is a statement or letter from a lender that details how much money you can borrow to purchase a home and what your interest rate might be. To get pre-approved, you may have to provide bank statements, pay stubs, tax forms and employment verification, among other documents. Once you’re pre-approved, you’ll receive a mortgage pre-approval letter, which you can use to begin viewing homes and making offers. It’s best to get pre-approved at the start of your home-buying journey before you start looking at homes.
How do mortgages work?
A mortgage is a type of loan you can use to purchase a home. It’s also an agreement between you and the lender that essentially says you can purchase a home without paying for it in-full upfront — you’ll just put some of the money as a down payment upfront (usually between 3% and 20% of the home price) and pay smaller, fixed equal monthly payments for a certain number of years plus interest.
For example, you probably don’t want to pay $400,000 for a home upfront, however, maybe you can afford to pay $30,000 upfront. A mortgage would allow you to make that $30,000 payment — a lender would provide you with a loan for the remaining amount of $370,000 and you’d agree to repay it plus interest to the lender over the course of 15 or 30 years.
Keep in mind that if you choose to put down less than 20%, you’ll be subject to private mortgage insurance, or PMI, payments in addition to your monthly mortgage payments. However, you can usually have the PMI waived after you’ve made enough payments to build 20% equity in your home.
What is a conventional loan?
Conventional loans are funded by private lenders and sold to government enterprises such as Fannie Mae and Freddie Mac. It’s the most common type of loan and some lenders may require a down payment as low as 3% or 5%.
What is an FHA loan?
Federal Housing Administration loans, or FHA loans, typically allow you to purchase a home with looser requirements. For example, this type of loan might let you get approved with a lower credit score and applicants may be able to get away with having a higher debt-to-income ratio. You typically only need to make a 3.5% down payment with an FHA loan.
What is a USDA loan?
USDA loans are offered through the United States Department of Agriculture and are aimed at individuals who want to purchase a home in a rural area. A USDA loan requires a minimum down payment of 0% — in other words, you can use it to buy a rural home without making a down payment.
What is a VA loan?
VA mortgage loans are provided through the U.S. Department of Veterans Affairs and are meant for service members, veterans and their spouses. They require a 0% down payment and no additional private mortgage insurance.
What is a jumbo loan?
How is my mortgage rate decided?
Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. While the Federal Reserve doesn’t set mortgage rates, they tend to move in reaction to actions taken by the Federal Reserve on its interest rates.
While market forces may influence the general range of mortgage rates, your specific mortgage rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.
What is the difference between a 15-year and a 30-year term?
A 15-year mortgage gives homeowners 15 years to pay off their mortgage in fixed, equal amounts plus interest. By contrast, a 30-year mortgage gives homeowners 30 years to pay off their mortgage. With a 30-year mortgage, your monthly payments will be lower since you’ll have a longer period of time to pay off the loan. That said, you’ll wind up paying more in interest over the life of the loan since interest is charged monthly. A 15-year mortgage lets you save on interest but you’ll likely have a higher monthly payment.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage lender review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of home loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best small down payment mortgages.
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Our methodology
To determine which mortgage lenders are the best, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best mortgages, we focused on the following features:
Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances where a lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.
After reviewing the above features, we sorted our recommendations by best for overall financing needs, quick closing timeline, lower interest rates and flexible terms.
Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Federal Reserve rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Get a closer look at these and how easily they’re applied on TikTok!
Bleucoin is a small shop based in India that sells a stylish variety of decals for walls, stairs, tile, and more.
Promising review: “I’m the biggest skeptic and also the most critical of imperfections…and I give this product a 100% approval! Super-high-quality materials, the colors are vibrant and the patterns are gorgeous, soooo easy to install (like ridiculously easy), and the shipping was lightning fast. Excellent communication by seller. I will totally be purchasing from them again!” —kurstinhollenbeck
Get them from Bleucoin on Etsy: the Warsaw tile design (left) for $9.49+ or the Hanover design (right) for $9.58+ (originally $12.98+; available in 11 sizes and matte or glossy finishes). And check out their store page for more designs!
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Americans with a financial advisor expect to retire two years earlier according to Northwestern Mutual’s Planning & Progress Study Ready to Retire: 75% of those who work with an advisor say they will be financially prepared for retirement versus 45% of people without an advisor Free from Anxiety: 64% of Americans with an advisor say … [Read more…]
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Tennis fashion certainly isn’t new to mainstream style, but this season, athletes and celebrities alike are helping to breathe new life into the trend (hi Zendaya). Ever since the “Challengers” press tour kicked off earlier this spring, social media has been abuzz watching Queen Z pay homage to her superstar character through a range of tennis outfits — from sporting a crisp halter-style mini frock that resembles a tailored tennis dress to strutting the (black) carpet in a pair of Loewe pumps that were fitted with a tennis ball on each heel (swoon!).
Zendaya’s sporty ensembles might be in theme with her new film, but the outfits also mark a much larger shift happening in fashion — one that’s merging sportswear with everyday athleisure pieces. Tenniscore fashion pulls inspiration from on-the-court icons like Coco Gauff or Serena Williams and blends it with everyday styles that are designed to be worn anywhere — think pleated tennis skirts, visors, and preppy vests.
How to Shop the Tenniscore Trend
Those viral Loewe tennis ball pumps might not be within your shopping means (cue the collective sigh), but fortunately, dozens of major brands are embracing the tenniscore trend with their own affordable collections that are designed to help you earn major style points — in your home, wardrobe, and even on the court.
Nike tennis skirts are all the rage on TikTok at the moment, but other athletic apparel labels like Athleta, Girlfriend Collective, and Lululemon have debuted new tennis-inspired styles that’ll help you serve up looks this season. You’ll find sporty prints and tennis-themed coffee table books from home retailers like Serena & Lily or West Elm. And if you’re hoping to take your athletic talents to the tennis court, you can shop out bestselling tennis gear online — including tennis rackets and workout shoes — from affordable brands like Amazon and Nordstrom.
Ahead, we curated a guide for how to shop the tennis trend, with products that’ll help you ace the preppy aesthetic, regardless of your interests or budget.
The home-buying process can be especially nerve-wracking if you’re worried about having less-than-ideal credit. Luckily, some lenders will consider applicants with bad credit — or no credit at all.
CNBC Select rounded up the top lenders that consider applicants with credit scores lower than the typical 620 requirement. We evaluated each based on the types of loans offered, customer support, the required minimum down payment amount, and other factors (see our methodology below).
Keep in mind that while you may be approved for a mortgage with a lower credit score, you’ll likely receive an interest rate on the higher end of the lender’s rate range.
Best mortgage lenders for bad credit
Best for flexible terms
Rocket Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and jumbo loans
Terms
15- and 30-year conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years.
Credit needed
Typically requires a 620 credit score but will consider applicants with a 580 as long as other eligibility criteria are met.
Minimum down payment
3.5% if moving forward with an FHA loan
Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards
Pros
Largest home lender in the U.S.
Offers 1% down conventional mortgage
High scores for customer satisfaction
Shorter-than-average closing time
Rebate of up to $10,000 for buying with Rocket Homes
Cons
No USDA mortgages, construction loans or HELOCs
Hard credit check required for customized rate
Higher origination fees than competition
No retail branches
Who’s this for? Rocket Mortgage stands out if you’re seeking flexibility. While most lenders tend to require a minimum credit score of 620, Rocket Mortgage accepts applicants with credit scores as low as 580.
Standout benefits: Rocket Mortgage offers a free program called Fresh Start to help potential applicants boost their credit scores before applying. Its proprietary low down payment option, the ONE+ mortgage, allows borrowers to put as little as 1% down.
[ Jump to more details ]
Best for veterans
Navy Federal Credit Union
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans, adjustable-rate mortgage
Terms
10 – 30 years
Credit needed
Not disclosed but lender is flexible
Minimum down payment
0%; 5% for conventional loan option
Terms apply.
Pros
0% downpayment for most loan options
flexible repayment terms ranging from 10 years to 30 years
Offers refinancing, second-home financing and loans for investment properties
No PMI required
Fast pre-approval
RealtyPlus program allows applicants to receive up to $9,000 cash back
Cons
Must be a Navy Federal Credit Union member to apply
Who’s this for? Navy Federal Credit Union is ideal for current or retired members of the Armed Forces with a Navy Federal Credit Union membership (immediate family members are also eligible). While this lender doesn’t disclose its required minimum credit score, it works with members to analyze their circumstances and find the right mortgage fit for them, making Navy Federal Credit Union a potentially more flexible lender if you have a lower credit score.
Standout benefits: You can use the RealtyPlus program to buy a home and receive up to $9,000 in cash back. Private mortgage insurance (PMI), is also not a requirement for a low down payment on a mortgage through this lender.
[ Jump to more details ]
Best for no PMI
CitiMortgage®
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and Jumbo loans
Terms
15 – 30 years
Credit needed
Minimum down payment
Terms apply.
Pros
Citi’s HomeRun Mortgage program allows for a downpayment as low as 3%
Citi’s Lender Assistance program gives eligible homebuyers a credit of up to $5,000 to use toward closing costs
Ability to choose between fixed-rate and adjustable-rate mortgages
New and existing Citi bank customers can qualify for closing cost discounts based on their account balance
HomeRun mortgage program allows for a downpayment of less than 20% without PMI
Provides homeownership education and counseling
Cons
No options for a 0% downpayment
Existing customers need high account balances to receive some of the highest interest rate discounts
Who’s this for? CitiMortgage is great if you want to put less than 20% down but avoid the monthly PMI bill. If you apply for a mortgage through Citi’s HomeRun program, you can make down payments as low as 3% without PMI. If you’ve already purchased your home, this program can also be used to refinance your mortgage.
Standout benefits: Existing Citi customers with an account balance between $1 and $49,999.99 can be eligible for a $500 closing credit. Those with higher balances can receive an interest rate discount. Qualified borrowers can use the Lender Paid Assistance program to get up to $7,500 in credits toward closing costs. Homeownership counseling and education are also available.
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Best for no credit score requirement
Guild Mortgage
Annual Percentage Rate (APR)
Fixed-rate and adjustable-rate available, apply online for rates.
Types of loans
Conventional loans, construction loans, FHA loans, VA loans, USDA loans and Jumbo loans
Terms
15-year to 30-year
Credit needed
Some loans require a 620 credit score, some require a 540 credit score or no credit score at all.
Minimum down payment
0% if moving forward with a USDA loan; 0% if moving forward with an Arrive Home™ or Zero Down mortgage (a 3% to 5% down payment is financed through a second mortgage with these options) ; 1% on conventional loans for some qualifying borrowers
Pros
Offers several low down payment mortgage options available
Wide variety of loans
Accepts applicants with credit as low as 540 or no credit at all with some loans
Provides lots of information online about the homebuying process
Robust brick-and-mortar and online presence
Cons
Rates are not available to view on the website
Mortgages may not be available for every home type
Who’s this for? Guild Mortgage can provide options even if you don’t have a credit score or have a score as low as 540 — a lower threshold than the typical 620 credit score lenders usually require to even look at an applicant. Instead, Guild uses proof of on-time payments such as rent checks, utility bills and insurance payments to verify an applicant’s credit. It also boasts a variety of loans and down payment assistance programs if you want to make a small down payment.
Standout benefits: Guild Mortgage’s Zero Down allows borrowers with a credit score of 600 or greater to take out an FHA loan with 0% down — the lender will provide an additional repayable loan to the borrower as a second mortgage to supplement the FHA’s traditional 3.5% down payment requirement. Qualifying borrowers who make up to 160% of the area median income can also take out Guild Mortgage’s Arrive Home™ loan, which allows borrowers to put 0% down by taking out a repayable second mortgage with the company.
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Best for a quick closing
CrossCountry Mortgage
Annual Percentage Rate (APR)
Fixed-rate and adjustable-rate available, apply online for rates.
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans
Terms
Apply online for terms
Credit needed
620 for conventional loans, 500 to 580 for some government-insured loans
Minimum down payment
Pros
Provides down payment grants
FastTrack Credit Approval program allows some borrowers to close on mortgage within 10 days
Website provides a variety of tools, including a mortgage calculator, homebuying guide, and refinancing guide
Available in all 50 states
Cons
Higher-than-average rates
Rates are not online
Who’s this for? CrossCountry Mortgage is great if you want a lender with faster-than-average closing times. It offers conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans. While most of its conventional loans require a 620 credit score, some federally insured options accept borrowers with a credit score as low as 500.
Standout benefits: CrossCountry Mortgage offers down payment grants for qualified buyers. With its FastTrack Credit Approval, CrossCountry says its borrowers have an edge in the home buying process with a reapproval process that allows borrowers to get the funds in as little as 10 days.
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More on our top lenders for those with bad credit
Rocket Mortgage
Rocket Mortgage — the largest home loan provider in the country — has a variety of loan options available — especially for those looking to make a small down payment. It accepts borrowers with credit scores as low as 580 and provides a large number of educational resources on its easy-to-use website. Rocket has consistently scored above average on customer satisfaction surveys.
Minimum credit score
580
Types of mortgage loans offered
Fixed-rate, adjustable-rate, FHA loans, VA loans, jumbo loans, HomeReady and Home Possible loans
Down payment minimum
1% with the ONE+; 3.5% with FHA loan
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Navy Federal Credit Union
Navy Federal Credit Union is the largest provider of VA loans and provides many benefits to veterans, and their immediate families. With a VA loan, you have the option to pay 0% down and the seller can contribute up to 4% of the home’s value toward closing costs. Navy Federal also offers the Military Choice mortgage, which has similar guidelines to the VA loan, such as no PMI and a 0% minimum down payment, but allows sellers to contribute up to 6% of the home’s value toward closing costs.
Minimum credit score
Not disclosed.
Types of mortgage loans offered
Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans
Down payment minimum
0%; 5% with conventional loans
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CitiMortgage
CitiMortgage allows homebuyers to make a small down payment without worrying about PMI. Citi offers qualifying existing customers closing cost aid or interest rate discounts.
Minimum credit score
580 if taking out an FHA loan.
Types of mortgage loans offered
Conventional loans, FHA loans, VA loans and jumbo loans
Down payment minimum
3%
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Guild Mortgage
Guild Mortgage provides many loan types for borrowers with much lower credit than lenders usually require. In some cases, a credit score is not even needed. Guild also provides several low down payment options.
Minimum credit score
540 for some mortgages; no credit needed for some mortgages
Types of mortgage loans offered
Conventional loans, construction loans, FHA loans, VA loans, USDA loans and Jumbo loans
Down payment minimum
0% with a down payment assistance loan as a second mortgage.
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CrossCountry Mortgage
CrossCountry Mortgage offers a wide variety of loans and says it can give its borrowers a leg up in the homebuying process through its FastTrack Credit Approval which allows borrowers to close on a loan in as little as 10 days.
Minimum credit score
580 or 500 for some government-insured loans.
Types of mortgage loans offered
Conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans
Down payment minimum
3%
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FAQs
What is pre-approval and how does it work?
Pre-approval is a statement or letter from a lender indicating how much money you qualify to borrow to purchase a home and your potential interest rate. You’ll likely have to provide bank statements, pay stubs, tax forms and employment verification, among other requirements, and once pre-approved, you’ll receive a mortgage pre-approval letter, which you can use to begin viewing homes and making offers. It’s best to get pre-approved at the start of your homebuying journey before you start looking at homes.
How do mortgages work?
A mortgage is a loan you can use to purchase a home. It’s also an agreement between you and the lender that essentially says you can purchase a home without paying for it in full and upfront — you’ll just need to put some of the money down — usually between 3% and 20% of the home price — and pay smaller, fixed monthly payments over a certain number of years, plus interest.
How is my mortgage rate decided?
Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. While the Federal Reserve doesn’t set mortgage rates, they do tend to move in reaction to actions taken by the Federal Reserve on its interest rates.
While market forces may influence the general range of mortgage rates, your specific rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.
What is a conventional loan?
A conventional loan is a loan that’s funded by private lenders and sold to government enterprises such as Fannie Mae and Freddie Mac. It’s the most common type of loan and some lenders may require a down payment as low as 3% or 5%.
What is an FHA loan?
A Federal Housing Administration loan, or FHA loan, typically allows you to purchase a home with looser requirements — for example, you may get approved with a lower credit score or be able to get away with having a higher debt-to-income ratio. You’ll typically only need to make a 3.5% down payment.
What is a USDA loan?
A USDA loan is offered through the United States Department of Agriculture and is aimed at individuals who want to purchase a home in a rural area. Best of all, USDA loans require a minimum down payment of 0% — in other words, you can use it to buy a rural home without a down payment.
What is a VA loan?
VA mortgage loans are provided through the U.S. Department of Veterans Affairs, meant for service members, veterans and their spouses and require a 0% down payment with no mortgage insurance.
What is a jumbo loan?
Borrowers who need a mortgage for more than $766,550 to purchase a single-family home (in most areas) will need to take out a jumbo loan. Note that these types of loans typically have stricter credit score and debt-to-income ratio requirements in part because they do not meet the Federal Housing Finance Agency’s (FHFA) conforming guidelines.
What is the difference between a 15- and 30-year term?
A 15-year mortgage gives homeowners 15 years to pay it off in fixed, equal amounts plus interest, while a 30-year mortgage gives 30 years to pay it off. With a 30-year mortgage, your monthly payments will be lower since you’ll have a longer period to pay off the loan, however, you’ll wind up paying more in interest over the life of the loan since it is charged every month. A 15-year mortgage, on the other hand, lets you save on interest but you’ll likely have to make a higher monthly payment.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best bad credit mortgages.
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Our methodology
To determine which mortgage lenders are the best for bad credit, CNBC Select analyzed dozens of U.S. mortgages offered by online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best mortgages, we focused on the following features:
Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender can cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list can offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances in which a particular lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.
Note that the rates and fee structures advertised for mortgages are subject to fluctuate per the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee the interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.