Can You Buy A Home If Your Income Is Low?

The good news is, you can stop paying rent and own that home even if your income is low.

Buying a home may not be your idea of “affordable housing.” Why? Because when you think of what it takes to purchase one, it seems anything but affordable. After all, not everyone has a high income, good credit, a sizable down payment sitting in their bank account, and so on.

Does this mean that rent is the only way to secure affordable housing? And does it mean that you’ll be paying your landlord’s mortgage for the rest of your life instead of your own? Thankfully, no, as you can buy a home, even if your financial situation isn’t ideal at the moment.

There are several ways to become a homebuyer with less than ideal income, credit, or savings. Here is a small sample of them.

Good Neighbor Next Door

Are you a nurse, teacher, or first responder? If so, the Good Neighbor Next Door program can put you in an extremely affordable HUD foreclosure home.

Just how affordable can such homes be? Remarkably, since this program gives you a 50 percent discount.

Should you qualify, you can get a HUD foreclosed home via an FHA mortgage. And if you don’t have a sizable down payment for a home, don’t worry, as you won’t need one here since it can get as low as $100.

Down Payment Assistance

Speaking of down payments, you can get assistance on this common obstacle for many first-time homebuyers. On average, down payment assistance (DPA) equals $12,000, which is quite a chunk of change and a humongous help.

Surprisingly, the use of such assistance isn’t widespread since most people don’t know such a thing even exists.

Where can you find down payment assistance? Employers, government agencies, and charities are its usual sources, and they often offer it in the form of a loan or a grant. The latter provides the benefit of not having to pay it back.

Some down payment assistance is awarded for people in areas that are being redeveloped or that are considered underserved. Others can get it by meeting specific income requirements.

FHA Loans

The Federal Housing Administration created this program to help first-time homebuyers or those with low income or poor credit.

Some feel that they’ll never be able to buy a home due to past mistakes that have led to high debt-to-income ratios or low credit scores. FHA loans eliminate this fear by making exceptions.

Some FHA borrowers can get loans with a 500 credit score. Others can get it even if their debt-to-income ratio reaches 45 percent.

USDA Loans

City homes are often a lot more costly than their rural counterparts. Should you be willing to make the shift out of city limits, the USDA could help you buy a home with one of its rural housing loans that require zero down payment.