Buying a House with Low Income: How to Get a Low Income Loan

How to Buy a House with Low Income

Having low income affects your debt to income ratio, which is a key factor in getting approved for a home loan. As the name suggests, the other key factor in your debt to income ratio is your debts. To improve your debt to income ratio with low income, pay off your debts, or pay them down significantly.

The debt to income ratio is not the only factor when getting approved for a home loan. If you are low income, make sure you have a great or excellent credit score, which you will also need for loan approval. Additionally, if you have a low debt to income ratio and excellent credit, you can work on saving for a down payment.

One great way to save for a down payment and make sure you can afford a monthly mortgage payment at the same time is to set aside the additional money you would be putting toward a mortgage payment every month and put it into a savings account for your down payment. Then, once you purchase your home, you will already be used to paying the higher amount.

There are also many low income and first time home buyer programs that can help you buy a home when you have low income.

Low Income Loan Options 

Below, we will outline several loan programs that can help people with low income as well as low credit scores purchase homes!

First, USDA programs can help low income families buy homes in rural areas. This type of loan offers 100% financing, which means you don’t need to put any money down up front. Then, you can make sure you retain an emergency fund and don’t run your savings out on your down payment.

Veterans can also qualify through 0% down mortgages through the Department of Veterans Affairs, and FHA programs offer 3.5% down payment options. Other government-backed programs include Fannie Mae and Freddie Mac loans. 

Having a low income doesn’t mean that you can’t buy a home. While income is an important factor in buying a home, there are several other factors that can help you get qualified to buy a home with a low income.