When it comes to buying a home, many people have concerns about being able to afford one. For some, this is a question of financial stability. For others, it’s about finding the right place to call home. Regardless of your reasons, one thing is for sure—you need to have a realistic idea of your income and ability to pay.
There are many folks that would like to buy a home with a low income but aren’t in a position to do so. Home prices have skyrocketed pushing the dream of homeownership out of reach for many would-be home buyers.
A shift to a buyer’s market might be the chance to buy a house with a lower income.
Let’s have a look at some of the options:
Talk to a mortgage lender. They will help you get pre-approved for a loan and find the best financing option for your home.
There are specific low-income mortgages that are worth looking into. Some of the loan programs that have more relaxed qualifications include:
Homeready from Fannie MaeHome Possible Advantage from Freddie Mac
An FHA mortgage is one of the most popular loan programs, especially for those who don’t have significant incomes. Lenders granting FHA mortgages also accept higher debt-to-income ratios. It is not unusual to see a mortgage lender grant a loan with a DTI of around 45 percent. There is also a low down payment requirement of only 3.5 %.
If you are serving or have served in the armed forces a VA mortgage can work well for low-income borrowers. It is one of the only true no down payment loan programs.
If you want to purchase a home out in the suburbs or a rural area a USDA mortgage allows the perfect opportunity to do so.
HomeReady and Home Possible Advantage loans from Freddie Mac
Both HomeReady from Fannie Mae and Home Possible Advantage from Freddie Mac offer home buyers the opportunity to purchase a home with a low down payment.
If you have a qualifying income and meet the program’s requirements, you could qualify to buy a house with as little as 3% down.
You are also allowed to borrow money from family and friends to help finance your down payment.
Put yourself in a better position to buy with a lower income:
There are always things you can do to put yourself in a better position to become a homeowner. Four vital things to do include:
Research low-income mortgage options—there may be other programs worth looking into for your home loan
Work on improving your credit score—higher credit scores provide better loan terms which will lower your monthly mortgage payments
Get a co-signer for your mortgage—by having a co-signer you may be able to take advantage of a borrower with better credit until yours improves
Keep a strict budget—eliminate spending on non-necessities
Buying a home with a low income is not out of the question when you have a solid game plan. Your local real estate professional can help you navigate the buying process. Download your free buyers’ guide at www.gofirstam.com/education